Analyzing and Computing Issue Price, Treasury Stock Cost and Shares Outstanding
The following is a stockholder equity section from Chipotle Mexican Grill, Inc. balance sheet (in thousands), except per share data.)
Shareholder’s Equity December 31, 2014
Preferred stock, $0.01 par value. 600,000 shares authorized,
no shares issued as o the 12/31/2014 ……..
Common stock $0.01 par value 230,000 shared authorized,
and 35, 394 shares issued 12/31/2014 354
Additional paid in capital 1,038,932
Treasury stock at cost, 4,367 common stock at 12/31/2014 (748,759)
Accumulated other comprehensive income (429)
Total shareholder’s equity $2,012,369
d. At what average cost has Chipotle repurchase its treasury on December 31, 2014?
e. Give 3 reasons why a company such as Chipotle would want to repurchase almost $750 million in common stock.
A buy back of shares means the repurchase of shares by the company. Under buy back, the company purchase the share from the shareholders of the company. It reduces issued capital of the company.
Number of treasury stock: 4,367
Amount of treasury stock: $748,759
The average price at which the C corporation should repurchase treasury stock on December 31, 2014 is calculated as follows:
The reasons for which a company like C corporation should repurchase almost 750 million its common stock is as follows:
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