Q1. For fiscal year ended on January 28, 2012 for AEO:
Beginning Retained Earnings, (__________ / January 28), 2011 ____________ thousand
+ Net income __________ thousand
- Dividends __________ thousand
- Other __________ thousand
= Ending Retained Earnings, January 28, 2012 ____________ thousand
Q2. On January 28, 2012 stockholders’ equity totaled ____________ thousand, which is the amount of business assets owned by shareholders?
Q3. Assume that AEO issued 1 million shares of preferred stock with a dividend rate of $5 per share.
a. Preferred shareholders would expect to receive ______ million in dividends each year.
b. (____________ / Common) shareholders always receive their dividends first; this is part of the “preferred” treatment. Therefore, if the Board of Directors declared an $80 million dividend, preferred shareholders would receive ________ million in dividends and common shareholders would receive _________ million in dividends.
c. (____________ / Common) stock usually has a stated dividend rate.
Q4a. A company has 170 million common shares outstanding. Assume there is a two-for-one stock split, after the stock split there would be (113 / 170 / 255 / ____ / 510) million common shares outstanding.
Assume there is a three-for-two stock split, after the stock split there would be (113 / 170 / _____ / 340 / 510) million common shares outstanding.
b. Because shareholders maintain the same proportionate share of a company’s wealth before and after a stock split, the stock split (increases / decreases / ____________) on shareholder wealth.
c. Under International Financial Reporting Standards (IFRS), preferred stock would be classified as (_________ / stockholders’ equity) and the preferred dividend reported as (_________ / dividends) on the income statement.
Q5. For each of the following events, identify the effect on stockholders’ equity.
a. Net income (____________/ decreases / has no effect on) stockholders’ equity.
b. Cash dividends (increase / ____________/ have no effect on) stockholders’ equity.
c. Repurchase of treasury stock (increases / ____________/ has no effect on) stockholders’ equity.
d. Reissue of treasury stock (____________/ decreases / has no effect on) stockholders’ equity.
Q6. (____________/ ____________/ Treasury) stock is publicly traded, meaning the shares are bought and sold on public stock exchanges such as the New York Stock Exchange and NASDAQ.