Stockholders' Equity and Higher-Leverage Ratios
The stockholders' equity section of the balance sheet typically includes the line items of retained earnings, common stock, treasury stock, and other comprehensive income. Select one company to analyze using the list of approved companies. Select two of these line items and explain what their balances might indicate about how the company is utilizing the investment by its stockholders. In your response, address whether you would want to purchase stock in the company based on your analysis. Participate in follow-up discussion by reviewing the information provided by classmates and providing your opinion as to whether you would purchase the company’s stock. In your response, compare your opinions and note any significant similarities or differences. Cite and Reference needed
Understanding Equity
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Understanding Equity
Stockholders’ equity gives a glimpse into the capitation of a company. To aid an investor to decide whether to buy into the company or not, financial ratio analysis will come into play. These ratios are; Debt-to-equity, Working Capital, Quick Ratio, and Debt to total assets (New Jersey CPA, 2020). To demonstrate this financial ratio analysis, let’s take Pepsico, Inc., and its subsidiaries, from the list of approved companies.
From its consolidated balance sheet for the year ended December 26, 2020, we single out common stock ($23million) and Retained earnings ($63,443million) as our line items (Form 10-K, 2021). The low value for the common stock indicates that this company utilizes a very small portion of this line item of equity to finan...
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