Question

Q1. Study the Statement of Stockholders’ Equity for the five years presented.
a. During fiscal year ended (FYE) 6/30/2003 stockholders’ equity increased primarily as a result of (_______________ / issuing common stock / repurchasing common stock / paying dividends).
b. During FYE 6/30/2004 stockholders’ equity (_______________/ decreased) primarily as a result of (___________ / issuing common stock / repurchasing common stock / paying dividends).
c. During FYE 6/30/2005 stockholders’ equity (increased / _______________) primarily as a result of (net income / issuing common stock / repurchasing common stock / ___________).
d. During FYE 6/30/2006 stockholders’ equity (increased / _______________) primarily as a result of (net income / issuing common stock / _______________ / paying dividends).
e. During FYE 6/30/2007 stockholders’ equity (increased / _______________) primarily as a result of (net income / issuing common stock / _______________/ paying dividends).
Q2. Study the Balance Sheet for the five years presented.
a. During FYE 6/30/2005 cash equivalents (increased / _______________) significantly as a result of (a net loss / repurchasing common stock / _______________).
b. During FYE 6/30/2006 cash equivalents (increased / _______________) primarily as a result of (a net loss / _______________ / paying dividends).
c. From 6/30/2004 to 6/30/2007 total liabilities (_______________/ decreased) whereas stockholders’ equity (increased / _______________), resulting in a(n) (____________ / decreasing) debt ratio and (_______________/ decreasing) financial leverage.
Q3. Study the Income Statement for the five years presented. From 6/30/2003 to 6/30/2007 revenues (_______________/ decreased), net income (_______________/ decreased), and EPS (_______________/ decreased).
Q4a. During FYE (6-30-2004 / _______________ / 6-30-2006) Microsoft paid a huge special one-time $3 per share dividend totaling _______________ billion. To pay this dividend, did Microsoft have enough cash? (_______________/ No) Enough retained earnings? (_______________/ No)
b. At this time Bill Gates owned 1.12 billion shares of Microsoft stock so his dividend was (1.12 / 2.24 / _______________) billion dollars. What did Bill Gates do with his dividend? (Buy a super-duper sports car / _______________ / Give it to his children)
Q5. Review the DuPont Analysis of ROE for the five years presented.
a. Asset turnover = Sales revenue / Total assets. During FYE 6/30/2005 revenue(______________ / decreased). The payment of this special dividend (increased /______________) cash, which (increased /______________) total assets, resulting in (______________/decreased) asset turnover.
b. ROA = ROS x Asset turnover. During FYE 6/30/2005 ROS (______________/ decreased) and asset turnover (______________/ decreased), resulting in ROA (decreasing / ______________/ more than doubling).
c. Financial Leverage = SE / Total Assets. During FYE 6/30/2005 liabilities (______________ / decreased), while SE (increased /_______________), which (_______________ / decreased) the debt ratio and (_______________ / decreased) financial leverage.
d. ROE = ROA x Financial Leverage. During FYE 6/30/2005 ROA (_______________/ decreased) and financial leverage (_______________/ decreased), resulting in ROE (decreasing / doubling / _______________).
Q6. What might have prompted this special one-time dividend?
Q7. Review the financial information presented for Microsoft. Explain how the special one-time $3 dividend affected each of the following items.
a. Cash, Asset Turnover, and ROA
b. Debt Ratio, Financial Leverage, and ROE
Q8. Cash is a (high / _______) earning asset. Explain.
Q9. Review the financial information presented for Microsoft. Explain how the purchase of common stock (treasury stock) affected each of the following items.
a. Cash, Asset Turnover, and ROA
b. Debt Ratio, Financial Leverage, and ROE


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  • CreatedSeptember 17, 2015
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