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EPS and effect of stock split on EPS

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10.1 read and interpret corporate governance statement. Refer to the "corporate governance" disclosures provided the "link on Intel corporation's web site. Identify the principal topics covered in those disclosures. Are there other topics that you believe would be appropriate to have included in those disclosures? Explain your answer.

10.4 read and interpret management's statement of responsibility. Find and read management's statement of responsibility in the annual report that you obtain the most recent issued annual report of a publicly owned manufacturing corporation of your choice. Identify the principal topics covered in that statement. Are there other topics that you believe would be appropriate to have included in the statement?
Explain your answer.

10.6 interpret auditors' opinion. To what extent is the auditors' opinion an indicator of a company's future financial success and future cash dividends to stockholders?

10.8 Calculate EPS and effect of stock split on EPS.
During the year ended December 31, 2009, Gluco, Inc split its stock on a 3-for-1 basis. In its annual report for 2008, the firm reported net income of $ 3,703,920 for 2008, with an average 268,400 shares of common stock outstanding for that year. There was no preferred stock.
A. What amount of net income for 2008 will be reported in Gluco's 2009 annual report?
B. Calculate Gluco's earnings per share for 2008 that would have been reported in the 2008 annual report.
C. Calculate Gluco's earnings per share for 2008 that will be reported in the 2009 annual report for comparative purposes.

10.12 understanding footnote disclosures and financial summary data. This problem is based on the 2006 annual report of Intel Corporation. Find the five year financial summary, or calculate the following:
A. percentage of R&D relative to net revenues in 2006.
B. amount by which property, plant, and equipment decreased during 2006 (from depreciation, asset sales, and similar transactions.)
C. year in which stockholders' equity grew by the greatest amount over the previous year.
D. change in total liabilities from 2002 to 2006.
Find the following data for 2006 in the notes to the consolidated financial statements.
E. Amount of work-in-process inventory
F. Total revenues from unaffiliated customers earned in Europe.
G. The company's effective tax rate.
H. Adjusted cost and estimated fair value of investments held in asset-backed securities.
I. Market price range of common stock for the fourth quarter of 2006.
J. Amount of land and buildings, exclusive of construction in progress.

For 10.12 go to Intel's website and get the 2006 annual report.

10.14. Find various accounting policy disclosures.

Refer to the financial statement footnotes or financial review section of the annual report. Obtain the most recent issued annual report of a publicly owned manufacturing corporation of your choice. And answer the following:
A) Do the financial statements report information about subsidiaries? Does the firm have any nonconsolidated subsidiaries?

B) What are the principal components included in the firms cash (or cash and equivalents, or cash and short-term investments)?

C) What depreciation method(s) is (are) being used for financial reporting purpose? How much total depreciation and amortization expense did the firm report?

D) Does the firm have any stock options outstanding? If so, how many option shares are exercisable at the end of the year?

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Solution Summary

This solution shows step-by-step calculations in an Excel file to determine the EPS and the effect of stock split on EPS for the Intel Corporation and Gluco, Inc.

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See Also This Related BrainMass Solution

Stock split effect EPS ,net assets, WASO, convertible, DEPS

Lee Corporation releases its financial statements with a simple capital structure for EPS. This period has seen a significant rise in stock price, and to make more shares available at a lower price, the company has planned on a two-for-one stock split. What effect would this have on EPS, net assets, and WASO? Do you recommend that Lee Corporation go ahead with the two-for-one split? Why or why not?

Question 2

There are times when a company has a convertible security that is considered to be antidilutive.

What is the proper accounting treatment of these securities with regard to EPS calculations? What effect do antidilutive securities have on EPS? Do you think that they should or should not be included in the calculation of EPS? Why or why not? Do the antidilutive securities have an effect on the stakeholder's perspective of the company's financial position?

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