Ch 9, 10, 12 P2

Types of common stock

Includes authorized shares, issued shares, outstanding shares, and treasury shares.

Authorized shares

Shares that are available to sell.

Issued shares

Shares that have been sold.

Outstanding shares

Shares that are issued and held by investors.

Treasury shares

Shares that have been issued and repurchased by the company.

Legal capital

Per share of stock assigned when the corporation's ID is first established.

Treasury stock

Stock that companies buy back to boost underpriced stock, distribute surplus cash, boost earnings per share, and satisfy employee stock ownership plans.

Retained earnings

Represents all net income, less all dividends, since the company began operations.

Declaration date

The date on which the board of directors announces the next dividend to be paid.

Record date

The date on which the company determines who its stockholders are.

Payment date

The date of the actual distribution of dividends.

Stock split

A large stock dividend that reduces the par or stated value per share.

Earnings per share

A measure of net income earned per share of common stock.

Income statement

Items expressed as a percentage of sales.

Balance sheet

Items expressed as a percentage of total assets.

Profitability ratios

Ratios that measure the earnings or operating effectiveness of a company over a period of time.

Earnings persistence

Current earnings expected to continue into future years.

One-time income items

Certain items that are part of net income in the current year but are not expected to persist.

Conservative accounting practices

Practices that result in lower income, lower assets, and higher liabilities.

Aggressive accounting practices

Practices that result in higher income, higher assets, and lower liabilities.