Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 14, Problem 4TP
On November 7, 2013, Twitter released its initial public offering (IPO) priced at $26 per share. When the day ended, it was priced at $44.90, reportedly making about 1600 people into millionaires in a single day.[20] At the time it was considered a successful IPO. Four years later, Twitter is trading at around $18 per share. Why do you think that occurred? Is Twitter profitable? How can you find out?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
(Related to Checkpoint 7.1) (Calculating rates of return) On December 5, 2007, the common stock of Google
Inc. (GOOG) was trading for $698.51. One year later the shares sold for only $283.99. Google has never paid a
common stock dividend. What rate of return would you have earned on your investment had you purchased the
shares on December 5, 2007?
...
The rate of return you would have earned is %. (Round to two decimal places.)
(Calculating rates of return) On December
17, 2007, the common stock of Google Inc. (GOOG) was trading for $
669.23. One year later the shares sold for only $
315.24. Google has never paid a common stock dividend. What rate of return would you have earned on your investment had you purchased the shares on December
17, 2007?
Question content area bottom
Part 1
The rate of return you would have earned is
enter your response here
%. (Round to two decimal places.)
This case explores Alibaba’s record setting IPO. Alibaba, China’s largest e-commerce company, was founded in 1999 with a $60,000 investment from entrepreneur Jack Ma. The company has since grown to be one of the world’s largest online e-commerce companies with transactions exceeding those of Amazon and eBay combined. In 2013, Alibaba’s leaders decided it was time to take the company public.
Alibaba hoped that by going public, it would raise the cash necessary to finance improvements to its infrastructure that would allow the company to continue its rapid growth. Alibaba also felt that an IPO would put it in a better position to implement an acquisition strategy. In addition, an IPO would give employees an option to sell their shares in the company.
Following the decision to go public, Alibaba explored where to hold its IPO. Initially, Hong Kong looked to be a strong choice, however it was later rejected when it became clear that local regulations could effectively cause Alibaba to…
Chapter 14 Solutions
Principles of Accounting Volume 1
Ch. 14 - Which of the following is not a characteristic...Ch. 14 - Issued stock is defined as stock that ________. A....Ch. 14 - Your friend is considering incorporating and asks...Ch. 14 - Par value of a stock refers to the ________. A....Ch. 14 - Which of the following is not one of the five...Ch. 14 - When a C corporation has only one class of stock...Ch. 14 - The number of shares that a corporations...Ch. 14 - The total amount of cash and other assets received...Ch. 14 - Stock can be issued for all except which of the...Ch. 14 - A company issued 40 shares of $1 par value common...
Ch. 14 - A company issued 30 shares of $.50 par value...Ch. 14 - A corporation issued 100 shares of $100 par value...Ch. 14 - The date the board of directors votes to declare...Ch. 14 - Which of the following is true of a stock...Ch. 14 - Stockholders equity consists of which of the...Ch. 14 - Retained earnings is accurately described by all...Ch. 14 - If a companys board of directors designates a...Ch. 14 - Corrections of errors that occurred on a previous...Ch. 14 - Owners equity represents which of the following?...Ch. 14 - Which of the following is a measurement of...Ch. 14 - Which of the following measures the portion of a...Ch. 14 - The measurement of earnings concept that consists...Ch. 14 - The correct formula for the calculation of...Ch. 14 - Most analysts believe which of the following is...Ch. 14 - Your corporation needs additional capital to fund...Ch. 14 - How many shares of stock should your new...Ch. 14 - What factors should a new company consider in...Ch. 14 - What are some of the reasons a business owner...Ch. 14 - Why would a company repurchase its own stock?Ch. 14 - The following data was reported by Saturday...Ch. 14 - A corporation issues 6,000 shares of $1 par value...Ch. 14 - When corporations issue stock in exchange for...Ch. 14 - A corporation issues 5,000 shares of $1 par value...Ch. 14 - On April 2, West Company declared a cash dividend...Ch. 14 - When does a corporation incur a liability for a...Ch. 14 - How does a stock split affect the balance sheet of...Ch. 14 - Your friend has questions about retained earnings...Ch. 14 - What does owners equity mean for the owner?Ch. 14 - What types of transactions reduce owners equity?...Ch. 14 - Sometimes financial statements contain errors....Ch. 14 - Retained earnings may be restricted or...Ch. 14 - Which financial statements do you need to...Ch. 14 - Where is EPS disclosed for publicly traded...Ch. 14 - Should investors rely on EPS as an investing tool?...Ch. 14 - What information do you need to calculate the...Ch. 14 - Which is the only ratio required to be reported on...Ch. 14 - You are an accountant working for a company that...Ch. 14 - What is the impact on stockholders equity when a...Ch. 14 - What is the most obvious difference between debt...Ch. 14 - How do creditors assess risk when lending funds to...Ch. 14 - Fortuna Company is authorized to issue 1,000,000...Ch. 14 - James Incorporated is authorized to issue...Ch. 14 - McVie Corporations stock has a par value of $2....Ch. 14 - Anslo Fabricating, Inc. is authorized to issue...Ch. 14 - St. Marie Company is authorized to issue 1,000,000...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Blanket Company has paid quarterly dividends every...Ch. 14 - Farmington Corporation began the year with a...Ch. 14 - Montana Incorporated began the year with a...Ch. 14 - Jesse and Mason Fabricating, Inc. general ledger...Ch. 14 - Roxannes Delightful Candies, Inc. began the year...Ch. 14 - Jupiter Corporation earned net income of $90,000...Ch. 14 - Longmont Corporation earned net income of $90,000...Ch. 14 - James Corporation earned net income of $90,000...Ch. 14 - Your high school friend started a business that...Ch. 14 - You are an accountant working for a manufacturing...Ch. 14 - What is the impact on stockholders equity when a...Ch. 14 - What is the biggest disadvantage to be considered...Ch. 14 - Your high school friend started a business that...Ch. 14 - Spring Company is authorized to issue 500,000...Ch. 14 - Silva Company is authorized to issue 5,000,000...Ch. 14 - Juniper Company is authorized to issue 5,000,000...Ch. 14 - Vishnu Company is authorized to issue 500,000...Ch. 14 - Ammon Company is authorized to issue 500,000...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Nutritious Pet Food Companys board of directors...Ch. 14 - Birmingham Company has been in business for five...Ch. 14 - Chelsea Company is a sole proprietorship. Ashley,...Ch. 14 - Tart Restaurant Holdings, Incorporated began the...Ch. 14 - Josue Fabricating, Inc.s accountant has the...Ch. 14 - Trumpet and Trombone Manufacturing, Inc. began the...Ch. 14 - Brunleigh Corporation earned net income of...Ch. 14 - Errol Corporation earned net income of $200,000...Ch. 14 - Bastion Corporation earned net income of $200,000...Ch. 14 - You are a CPA who has been hired by DEF Company to...Ch. 14 - You are a CPA who has been hired by DEF Company to...Ch. 14 - You are a CPA who has been hired by DEF Company to...Ch. 14 - Wingra Corporation was organized in March. It is...Ch. 14 - Copper Corporation was organized in May. It is...Ch. 14 - EllaJane Corporation was organized several years...Ch. 14 - Aggregate Mining Corporation was incorporated five...Ch. 14 - Aggregate Mining Corporation was incorporated five...Ch. 14 - Aggregate Mining Corporation was incorporated five...Ch. 14 - The board of directors is interested in investing...Ch. 14 - You are a consultant for several emerging,...Ch. 14 - You are the accountant for Kamal Fabricating, Inc....Ch. 14 - You are a consultant working with various...Ch. 14 - You are the president of Duke Company and are...Ch. 14 - You are the president of Duke Company and are...Ch. 14 - Autumn Corporation was organized in August. It is...Ch. 14 - MacKenzie Mining Corporation is authorized to...Ch. 14 - Paydirt Limestone, Incorporated was organized...Ch. 14 - Tent Tarp Corporation is a manufacturer of...Ch. 14 - Tent Tarp Corporation is a manufacturer of...Ch. 14 - Tent Tarp Corporation is a manufacturer of...Ch. 14 - You are a CPA working with sole proprietors....Ch. 14 - You are a consultant for several emerging, high...Ch. 14 - You are the accountant for Trumpet and Trombone...Ch. 14 - You have some funds that you would like to invest...Ch. 14 - You are a consultant working with various...Ch. 14 - Your bakery is incorporated and is looking for...Ch. 14 - Do some research: why did Facebook choose to...Ch. 14 - Do some research: why is Comcast incorporated in...Ch. 14 - On November 7, 2013, Twitter released its initial...Ch. 14 - Research online to find a company that bought back...Ch. 14 - As a bakery business continues to grow, cash flow...Ch. 14 - Use the internet to find a company that declared a...Ch. 14 - Use the internet to find a publicly-held companys...Ch. 14 - Use the internet to find a publicly-held companys...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Define cost object and give three examples.
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
The circumstances where a firm can increase its share price by cutting its dividend and investment. Introductio...
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
What is an action plan? Why are action plans such an important part of market planning? Why is it so important ...
MARKETING:REAL PEOPLE,REAL CHOICES
1-13. Identify a product, either a good or a service, that will take advantage of this opportunity. Although yo...
Business Essentials (12th Edition) (What's New in Intro to Business)
An experimental composite engine block for an automobile will trim 20 pounds of weight compared with a traditio...
Engineering Economy (17th Edition)
E2-13 Identifying increases and decreases in accounts and normal balances
Learning Objective 2
Insert the mis...
Horngren's Accounting (12th Edition)
Knowledge Booster
Similar questions
- This case explores Alibaba’s record setting IPO. Alibaba, China’s largest e-commerce company, was founded in 1999 with a $60,000 investment from entrepreneur Jack Ma. The company has since grown to be one of the world’s largest online e-commerce companies with transactions exceeding those of Amazon and eBay combined. In 2013, Alibaba’s leaders decided it was time to take the company public. Alibaba hoped that by going public, it would raise the cash necessary to finance improvements to its infrastructure that would allow the company to continue its rapid growth. Alibaba also felt that an IPO would put it in a better position to implement an acquisition strategy. In addition, an IPO would give employees an option to sell their shares in the company. Following the decision to go public, Alibaba explored where to hold its IPO. Initially, Hong Kong looked to be a strong choice, however it was later rejected when it became clear that local regulations could effectively cause Alibaba to…arrow_forwardOn August 19, 2004, Google completed its IPO of 18.5 million shares to the initial investors at $80 per share. The closing price of the stock that same day was $100.00. What was the dollar value of the underpricing associated with the Google IPO? (Round answer to 0 decimal places, e.g. 5,275.)arrow_forwardFelton Publishing recently completed its IPO. The stock was offered at $14.07 per share. On the first day of trading, the stock closed at $19.97 per share. a. What was the initial return on Felton? b. Who benefited from this underpricing? Who lost, and why?arrow_forward
- Please show all equations and work as needed. Make the correct answer clear. If possible, please type work so it can be copied. Thank you.arrow_forwardOur Space is a social media site that is growing in popularity. The firm has been around for a few years and has created a nice market niche for itself. In fact, it actually turned a profit last year, albeit a fairly small one. After doing some basic research on the company, you've decided to take a closer look. You plan to use the price-to-sales ratio to value the stock, and you have collected P/S multiples on the following social media companies: Company Facebook Snap Twitter P/S Multiples 13.51 18.29 13.27 Find the average P/S ratio for these three firms. Given that Our Space is expected to generate $46 million in sales next year and will have 13 million shares of stock outstanding, use the average P/S ratio you computed above to put a value on Our Space's stock. Question content area bottom Part 1 The average P/S ratio for the 3 firms is?arrow_forwardPublishing recently completed its IPO. The stock was offered at $14.76 per share. On the first day of trading, the stock closed at $18.33 per share. a. What was the initial return on Felton? b. Who benefited from this underpricing? Who lost, and why?arrow_forward
- Raghubhaiarrow_forwardBlaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $19.93 but by year end it was only $17.82. If the firm paid a total cash dividend of $1.98 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? Question content area bottom Part 1 The rate of return you would have earned is enter your response here%. (Round to two decimal places.)arrow_forwardMargoles Publishing recently completed its IPO. The stock was offered at $14.00 per share. On the first day of trading, the stock closed at $19.00 per share. a. What was the initial return on Margoles? b. Who benefited from this underpricing? Who lost, and why? a. What was the initial return on Margoles? The initial return was 1%. (Round to one decimal place.) b. Who benefited from this underpricing? (Select the best choice below.) OA. Owners of other shares outstanding (not part of the IPO) and underwriters. O B. The company and underwriters. O C. Investors who bought shares at the IPO price of $14.00/share and investment banks (indirectly from future business) O D. The company and owners of other shares outstanding (not part of the IPO). Who lost? (Select the best choice below.) 0 A. Owners of other shares outstanding (part of the IPO) O B. Owners of other shares outstanding (not part of the IPO) O C. Both of the above. 0 D. Investors who bought shares at the IPO price of…arrow_forward
- (Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $17.95 but by year end it was only $16.91. If the firm paid a total cash dividend of $1.76 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is %. (Round to two decimal places.)arrow_forwardBlaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $21.32 but by year end it was only $20.17. If the firm paid a total cash dividend of $2.49 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? Question content area bottom Part 1 The rate of return you would have earned is enter your response here%. (Round to two decimal places.) Part 2 The rate of return you would have earned if the firm paid no cash dividend is enter your response here%. (Round to two decimal places.)arrow_forwardYour investment bankers price your IPO at $15.08 per share for 10.5 million shares. If the price at the end of the first day of trading is $17.16 per share, a. What was the percentage underpricing? b. How much money did the firm miss out on due to underpricing?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College