Treasury stock : The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock. Earnings per share (EPS) : The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock , and stock options, reduce the EPS by increasing the common shares. Facts of the case : The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years. To explain : The method through which the buyback of shares provide a ‘quick fix’ for EPS

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Answer 1

Question

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

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Answer 2

Question

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

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Answer 3

Question

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

Expert Solution & Answer

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Answer 4

Question

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

Expert Solution & Answer

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Answer 5

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

Answer 6

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

Answer 7

Chapter 19, Problem 19.8BYP

(1)

To determine

Treasury stock: The shares which were reacquired or bought back by the company, but not formally retired from the corporation stock, are called as treasury stock.

Earnings per share (EPS): The amount of earnings made available to each common share is referred to as earnings per share. Dilutive securities like convertible bonds, convertible preferred stock, and stock options, reduce the EPS by increasing the common shares.

Facts of the case: The discussion between RB, chief financial officer, and JL, controller of IN Solutions reveals that JL proposes that they should go for a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year. Although the company has grown rapidly in the growth stage, the profits are saturated in the recent years.

To explain: The method through which the buyback of shares provide a ‘quick fix’ for EPS

Answer 8

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

Answer 9

(2)

To determine

To explain: Whether the proposal made by JL is ethical.

Answer 10

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

Answer 11

(3)

To determine

To indicate: The persons who are affected by the implementation of the proposal.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 19 - Prob. 19.1Q Ch. 19 - Prob. 19.2Q Ch. 19 - The Tax Code differentiates between qualified...Ch. 19 - Stock option (and other share-based) plans often...Ch. 19 - What is a simple capital structure? How is EPS...Ch. 19 - Prob. 19.6Q Ch. 19 - Blake Distributors had 100,000 common shares...Ch. 19 - Why are preferred dividends deducted from net...Ch. 19 - Prob. 19.9Q Ch. 19 - The treasury stock method is used to incorporate...

Solution Summary: The author explains that JL proposes a buyback of shares to ‘quick fix’ the EPS numbers before the closure of current fiscal year.

To explain: Whether the proposal made by JL is ethical.

To indicate: The persons who are affected by the implementation of the proposal.

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Chapter 19 Solutions