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retaker
09-04-2002, 12:10 PM
Hello,

On some of the Finance questions (Chapter 16, I think) they give you a excerpt from the books of a compay and ask for the number of shares outstanding.
It looks like the entry for common stock includes the treasury stock even though the treasury stock has it's own listing. Is this correct? Is this done in reality?

Sorry to be vague again, I don't have the CSM problem in front of me.

c3 taker
09-04-2002, 02:29 PM
retaker......from my understanding (i don't have any books in front of me so correct me if I'm wrong)

shares outstanding = shares issued - treasury stock shares

so if you see treasure shares = 20,000 and shares outstanding = 800,000 then you know that the company issued 820,000 at one time. A treasury stock is when the company goes out and buys some of it's stock back, which decreases the amount of stock still out there (outstanding).

Not sure if I answered anything you were asking, but hope that helped! :)

retaker
09-04-2002, 05:23 PM
Yeah, I know the formula, but I am talking about the problems from CSM where it says: Par value of common stock, \$1, and 10,000 shares of treasury stock. How many shares are outstanding.

Common Stock = 80,000
Aditional Paid in capital = 140,000
Treasury Stock = (25,000)

Ans. 80,000 - 10,000 = 70,000

Easy problem if you realize that the "Common Stock" includes the treasury stock.

What is the deal with that Additional paid in capital BS, anyway?

Why when you issue more shares at \$X per share do you add:

(Parvalue)*(#issued) to the existing Common Stock number, and

(X - parvalue)*(#issued) to Aditional Paid in Capital ?

Who made up these stupid rules? Accountants?

Come on, appearantly there are quite a few of you new fangled Business, or Finance majors out there who are attracted to this profession.... you should know the answer to this..