Stock and Shares of Merck & Co., Inc. and GlaxoSmithKline plc
Merck & Co., Inc. and GlaxoSmithKline plc
October 20, 2014
Concepts
A. Common Stock
i. Authorized – 5, 400,000,000 shares ii. Common stock issued – 2,983,508,675 shares iii. In 2007, Merck issued 2,983,508,675 shares (one cent par value)
Total dollar value: 2,983,508,675*0.01=29,835,086.75 iv. Common shares held in treasury – 811,005,791
v. Common shares outstanding – 2,172,502,884 (shares issued – treasury shares) vi. December 31, 2007 market cap - $125,157,891,147 ($57.61 stock price x 2,172,502,884 shares outstanding)
B.
i. 10,000,000,000 shares ii. 6,012,587,026 shares iii. 5,373,862,962 shares iv. 504,194,158 shares
v. Share capital is the amount of stock the company has purchased by trading stock to a shareholder. Share premium is the amount the stock is sold when the allocation price is more than par value. Merck calls these accounts on their GAAP balance sheet common stock and other paid-in capital.
C. Companies pay dividends on their common or ordinary shares because of numerous reasons. Generally, dividend is viewed as interest resulted from shareholders’ investment. When companies stay profitable and have stable earning, dividends can send a strong message to the market about the outstanding performance of management to attract more investors. However, when it is determined that the cash would yield more profits by reinvestment, paying out dividends may not be favorable.
Company uses cash to pay dividend, and this reduces the company’s assets and the company’s equity. Thus, stock price of the company decrease to compensate for the drop in the company’s assets and the company’s equity.
D. Treasury stock, stock that is bought back by the company that issued it, reduces the shares of outstanding stock on the market. Treasury stock can be purchased to boost the strength of the stock if it is undervalued, and protect the company’s majority in case of a buyout.
Process
E. Retained Earnings 3,310.7
October 20, 2014
Concepts
A. Common Stock
i. Authorized – 5, 400,000,000 shares ii. Common stock issued – 2,983,508,675 shares iii. In 2007, Merck issued 2,983,508,675 shares (one cent par value)
Total dollar value: 2,983,508,675*0.01=29,835,086.75 iv. Common shares held in treasury – 811,005,791
v. Common shares outstanding – 2,172,502,884 (shares issued – treasury shares) vi. December 31, 2007 market cap - $125,157,891,147 ($57.61 stock price x 2,172,502,884 shares outstanding)
B.
i. 10,000,000,000 shares ii. 6,012,587,026 shares iii. 5,373,862,962 shares iv. 504,194,158 shares
v. Share capital is the amount of stock the company has purchased by trading stock to a shareholder. Share premium is the amount the stock is sold when the allocation price is more than par value. Merck calls these accounts on their GAAP balance sheet common stock and other paid-in capital.
C. Companies pay dividends on their common or ordinary shares because of numerous reasons. Generally, dividend is viewed as interest resulted from shareholders’ investment. When companies stay profitable and have stable earning, dividends can send a strong message to the market about the outstanding performance of management to attract more investors. However, when it is determined that the cash would yield more profits by reinvestment, paying out dividends may not be favorable.
Company uses cash to pay dividend, and this reduces the company’s assets and the company’s equity. Thus, stock price of the company decrease to compensate for the drop in the company’s assets and the company’s equity.
D. Treasury stock, stock that is bought back by the company that issued it, reduces the shares of outstanding stock on the market. Treasury stock can be purchased to boost the strength of the stock if it is undervalued, and protect the company’s majority in case of a buyout.
Process
E. Retained Earnings 3,310.7
Bibliography: Drake, Michael, Ellen Engel, Eric Hurst, and Mary Lea McAnally. Cases in Financial Reporting. 8th ed. Cambridge Business, LLC, 2015. Print. "Chapter 11 Reporting and Analyzing Stockholder 's Equity." Web. 20 Oct. 2014. http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0CCYQFjAB&url=http%3A%2F%2Fic.ucsc.edu%2F~shep%2F10a%2F10APPT%2F8e%2Fhho8e_ch11_stud.ppt&ei=OpJFVMHbHY3KggT56ILQBg&usg=AFQjCNHmg-dVOXA-hdjxLiYeZfGH7HEdyg&sig2=gOLTEQL0O5xorG4L8stSPg&bvm=bv.77880786,d.eXY