AC Ch.10 Stockholders' Equity

Authorized stock

Maximum number of shares the company is allowed to issue

Unissued stock

Stock that is authorized but never sold

Issued stock

Shares sold to investors (outstanding + treasury)

Outstanding stock

Issued shares held by investors; receive dividends

Treasury stock

Issued shares repurchased by the company (stock you sold and then decided to buy back)

Common stock

Shares representing ownership in a corporation

Market value

Current price at which a share trades in the stock market

Par value

Nominal legal value assigned to stock; used to record stock when issued (It is not market value) ( Essentially, where the estate says, ‘Hey, you’re selling something, you need to put a value/cost to it’)

Additional paid-in capital (APIC)

An SE account recording amounts received above par value

No-par value stock

Stock issued without an assigned par value. The entire amount received is recorded in common stock (allowed by some states)

Preferred stock

Gives holders certain preferences over common stockholders

Treasury stock

A company’s own issued shares that it buys back

Retained Earnings

Cumulative profits of a company minus dividends paid out to stockholders since the company began; can have a positive or negative balance

Accumulated deficit

The negative balance on retained earnings

Cash dividends

Cash distributions to stockholders. Not all companies pay dividends.

Net income - Preferred dividends / Weighted-average common shares outstanding

What is the formula for Earnings Per Share (EPS)?

EPS

Measures net income earned per share of common stock.