Swimtech Pools Inc. (SPI) reported the following in its financial statements for the quarter ended March 31, 2021. 2. Common Stock $1 par, 50,000 shares issued and outstanding Additional Paid-In Capital Retained Earnings Total Stockholders' Equity December 31, 2020 $ 50,000 30,000 20,000 $100,000 March 31, 2021 $ 50,000 30,000 20,000 $100,000 During the quarter ended March 31, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000. Required: 1. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended March 31. Assume SPI repurchases 10,000 of its common stock at a price of $2 per share on April 1, 2021. Also assume that during the quarter ended June 30, 2021, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended June 30, 2021. 3. Based on your calculations in requirements 1 and 2, what can you conclude about the impact of a stock repurchase on EPS and ROE?
Swimtech Pools Inc. (SPI) reported the following in its financial statements for the quarter ended March 31, 2021. 2. Common Stock $1 par, 50,000 shares issued and outstanding Additional Paid-In Capital Retained Earnings Total Stockholders' Equity December 31, 2020 $ 50,000 30,000 20,000 $100,000 March 31, 2021 $ 50,000 30,000 20,000 $100,000 During the quarter ended March 31, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000. Required: 1. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended March 31. Assume SPI repurchases 10,000 of its common stock at a price of $2 per share on April 1, 2021. Also assume that during the quarter ended June 30, 2021, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended June 30, 2021. 3. Based on your calculations in requirements 1 and 2, what can you conclude about the impact of a stock repurchase on EPS and ROE?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 85PSB: Common Dividends Thompson Payroll Service began in 2019 with 1,500,000 authorized and 820,000 issued...
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