What is the proper definition of net income as used in an income statement quizlet?

This occurs when a company issues new stock which results in a decrease of an existing stockholder's ownership percentage of that company. This can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each existing stockholder owns a smaller, percentage of the company, making each share less valuable.

Inhaltsverzeichnis Show

What is the proper definition of net income as used in an income statement?
What is the definition of net income quizlet?
Which of these is the best definition of net income '?
How do you find the net income on an income statement quizlet?

This is simply a case of cutting the cake into more pieces. There will be more pieces but each will be smaller. So, you will still get your piece of the cake only that it will be smaller than you had been expecting, which is often not a desired outcome.

A share of stock represents ownership in that company. When the board of directors decide to take their company public, usually through an initial public offering (IPO), they sanction the number of shares that will be initially offered. This number of outstanding stock is commonly referred to as the "float". If that company issues additional stock (often called secondary offerings) they have officially ___ their stock. The shareholders who bought the IPO now have a smaller ownership stake in the company.

While it primarily affects company ownership, this also reduces the stock's EPS (net income divided by the "float") which often depresses stock prices. For this reason, many public companies calculate both EPS and diluted EPS, which is essentially a "what-if-scenario".

Diluted EPS assumes that potentially dilutive securities have already been converted to outstanding shares thereby increasing the denominator (the "float").

Share ___may happen any time a company needs additional capital, seeing as new shares are issued on the public markets. The potential upside of share ___ is that the capital the company receives from selling additional shares can improve the company's profitability and the value of its stock.

Understandably, share ___ is not normally viewed favorably by existing shareholders, and companies sometimes initiate share repurchase programs to help curb dilution. However, stock splits enacted by a company do not increase or decrease ___. In situations where a business splits its stock, current investors receive additional shares, keeping their percentage ownership in the company static.

Fundamentals of Financial Management, Concise Edition

10th EditionEugene F. Brigham, Joel Houston

777 solutions

Intermediate Accounting

14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

1,471 solutions

Accounting: What the Numbers Mean

9th EditionDaniel F Viele, David H Marshall, Wayne W McManus

338 solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,009 solutions

Fundamentals of Financial Management, Concise Edition

10th EditionEugene F. Brigham, Joel Houston

777 solutions

Century 21 Accounting: General Journal

11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman

1,009 solutions

Intermediate Accounting

14th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

1,471 solutions

Accounting: What the Numbers Mean

9th EditionDaniel F Viele, David H Marshall, Wayne W McManus

338 solutions

What is the proper definition of net income as used in an income statement?

Net income refers to the amount an individual or business makes after deducting costs, allowances and taxes. In commerce, net income is what the business has left over after all expenses, including salary and wages, cost of goods or raw material and taxes.

What is the definition of net income quizlet?

Net Income is the total amount of money your business has made after expenses have been removed. Sales are the total amount of sales you've generated. When you divide your net income by your sales, you'll get your organization's profit margin. A high-profit margin indicates a very healthy company.