ACC 230 Week 3 DQ1 - 7387

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DQ 1 • Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might the information contained within the stockholder equity statement be used for management and investor decision-making? Provide specific examples of situations in which the stockholder equity information might be used.

The statement of stockholders equity is a section of the balance sheet containing information on the company’s capital earnings in exchange to the stock. The statement provides info on the capital that is paid to stockholders and the amount that is retained for the company.

The statement of stockholders equity can be used by management and investors for many purposes. Management can use the information to determine how the company is doing and what capital is being retained for the company to grow with. Investors can determine the success of the company and determine how the company is paying stockholders or the percentage they often retain for company growth. This provides the investor with information on whether the company is one that they would feel comfortable investing in or not.

When determining whether or not to invest in company investors like to exam the statement of stockholder equity. While some investors may prefer to be paid out others may prefer capital to be retained in an attempt for company growth and potentially higher earnings.

 

Solution Description

DQ 1 • Post your answer to Problem 3.5 on p. 109 (Ch. 3). How might the information contained within the stockholder equity statement be used for management and investor decision-making? Provide specific examples of situations in which the stockholder equity information might be used.