ACCT $321$ CHAPTER $14$ HANDOUT SOLUTIONS $|$ PAGE $1$

CHAPTER $14$: EQUITY $(6$ POINTS$)$

Financial Statement Analysis

Required: Refer to Tesla, Inc.$$s $2022$ Form $10$K and specifically item $8,$ Financial Statements and Supplementary

Data, which is included in the financial information section of course documents included in Canvas.

$1.$ During lecture we discussed the $$book value$$ of a company. At December $31,2022$ what was Tesla$$s book value?

$[$Hint: Reflecting on the balance sheet equation may help you answer this question. If not, then remember from

lecture that items in the Mezzanine section and noncontrolling interests in the equity section of the balance sheet are

part of shareholders$$ equity.$][1/2$ point$]$

$2.$ Explain what Tesla$$s book value means using the concepts we discussed during lecture. $[1/2$ point$]$

$3.$ At December $31,2022$ Tesla had $3,164[$in millions$]$ shares of common stock outstanding. At the same time period,

Tesla had an additional $345[$in millions$]$ of dilutive common stock. What is Tesla$$s equity market value at December

$31,2022?[$Hint: You will need to use Yahoo Finance Historical Data to find Tesla$$s adjusted close daily common

stock price per share at December $31,2022$ to answer this question.$][1$ point$]$

$4.$ Is Tesla$$s equity market value at December $31,2022$ different than Tesla$$s book value at December $31,2022?$ As

discussed during lecture, why? $[2$ points$]$

$.$

$5.$ During lecture you learned that preferred shares generally have a face or par value and often have an annual

dividend rate attached. You also learned that preferred shareholders are $$preferred$$ because, among other things,

they have a liquidation preference over common shareholders $[$meaning preferred gets paid before common receives

a penny$].$ Read the following facts and compute how much of the $$1,500,000$ cash dividend will be paid to the

preferred and common shareholders. $[2$ points$]$

The following is the shareholders$$ equity section of Simpson Co$.$ at $12/31/2022$:

Common Stock $($$$1$ par value; $20,000,000$ shares authorized; $4,000,000$ shares issued and outstanding$)$ $$4,000,000$

$7\%$ Preferred stock $($$$30$ par value; $1,000,000$ shares authorized; $400,000$ shares issued and outstanding$)12,000,000$

Additional paid$-$in capital on common stock $17,000,000$

Retained earnings $35,000,000$

Total Stockholders$$ Equity $$68,000,000$

Simpson declares dividends on common and preferred stock annually. On $12/23/2022,$ Simpson declares the annual dividend

of $$1,500,000$ to shareholders of record on $12/31/2022,$ to be paid $1/5/2023.$

Required: Determine the total $ amount of the dividend that is allocated to common and preferred shareholders. You

must show your work.

ACCT $321$ CHAPTER $14$ HANDOUT SOLUTIONS $|$ PAGE $2$

Common

$+1$ POINT

Preferred

$+1$ POINT