Prudential Financial Inc.: Stockholders’ Equity and Balance Sheet Leverage

1087 WordsApr 4, 20145 Pages
Corporate Finance Case Study: Prudential Financial Inc.: Stockholders’ Equity and Balance Sheet Leverage 1. Compare the stockholders’ equity section of the balance sheet with the statement of stockholders’ equity. Describe in general terms how they relate. The Balance Sheet equity is a snapshot of the balances at book value of the funds contributed by the owners to finance operations, whereas the statement of stockholders’ equity shows a summary of the transactions which took place during a financial period, ie shows the movement. The closing balances in the statement of stockholders’ equity will be the balance on the Balance Sheet of the business. For example, the common stock held in treasury in the Balance Sheet will show…show more content…
Nb in the above calculation it was assumed that the stock based compensation (ie the shares issued to employees / management) were reissued based on the same price as the shares repurchased in the market for the financial year, that is, they were not issued using FIFO or average cost, they were recorded as LIFO, last in first out. The above assumption also applies to the senior notes that were converted to stock during the year. Senior notes are debt securities which have been exchanged into common stock. 5. What does the account “Accumulated other comprehensive income” likely represent for Prudential? What is the logic of including this account in the stockholders’ equity section of the balance sheet? The account would represent the unrealised gains /losses estimate. This is not included in the P&L / income statement as this

More about Prudential Financial Inc.: Stockholders’ Equity and Balance Sheet Leverage

Open Document