Chapter 11
Stockholders’ Equity: Capital Stock and Dividends 492
Nature of a Corporation 494
Characteristics of a Corporation 494, Forming a
Corporation 494
Sources of Paid-In Capital 496
Common Stock 496, Market for Common Stock 497,
Preferred Stock 498
Issuing Stock 499
Premium on Stock 499, No-Par Stock 500, Stock Options 501
Treasury Stock 501
Stock Splits 503
Analyzing Financing Alternatives 504
Accounting for Dividends 505
Cash Dividends 505, Stock Dividends 507
Reporting Stockholders’ Equity 508
Accumulated Other Comprehensive Income (Loss) 508,
Reporting Stockholders’ Equity on the Balance Sheet 509
Analyze Dividends 510
Dividend Yield 510, Dividend Payout Ratio 511
Summary of Learning Goals 512
Glossary 513
Chapter 12
Special Income and Investment Reporting Issues 536
Unusual Items Affecting the Income Statement 538
Unusual Items Reported Above Income from Continuing
Operations 538, Unusual Items Reported Below Income from
Continuing Operations 540
Earnings per Common Share 542
Accounting for Investments in Stocks 544
Short-Term Investments in Stocks 544, Long-Term Investments
in Stocks 546, Sale of Investments in Stocks 547, Investment
Reporting 548, Business Combinations 549
Investments in Bonds 549
Accounting for Bond Investments—Purchase, Interest,
and Amortization 550, Accounting for Bond Investments—
Sale 551
Market-Based Financial Measures 552
Price-Earnings Ratio 552, Price-Book Ratio 554
Summary of Learning Goals 555
Glossary 556
Chapter 13
Statement of Cash Flows 578
Reporting Cash Flows 580
Cash Flows from Operating Activities 580, Cash Flows from
Investing Activities 581, Cash Flows from Financing Activities
582, Noncash Investing and Financing Activities 582, No
Cash Flow per Share 583
Statement of Cash Flows—The Indirect Method 584
Retained Earnings 584, Cash Flows from Operating Activities
585, Depreciation 586, Current Assets and Current Liabilities
587, Gain on Sale of Land 587, Reporting Cash Flows from
Operating Activities 588, Cash Flows Used for Payment of
Dividends 588, Common Stock 589, Bonds Payable 589,
Building 589, Land 590, Preparing the Statement of Cash
Flows 591
Statement of Cash Flows—The Direct Method 591
Cash Received from Customers 592, Cash Payments for
Merchandise 593, Cash Payments for Operating Expenses
594, Gain on Sale of Land 594, Interest Expense 595, Cash
Payments for Income Taxes 595, Reporting Cash Flows from
Operating Activities—Direct Method 595
Analysis and Interpretation of Cash Flows 596
Cash Conversion Cycle 596, Free Cash Flow 597
Summary of Learning Goals 599
Glossary 599
Chapter 14
Financial Statement Analysis 630
Horizontal and Vertical Analysis 632
Horizontal Analysis 632, Vertical Analysis 633, Common-
Size Statements 635, Other Analytical Measures 635
Profitability Analysis 636
Rate Earned on Stockholders’ Equity 636, Rate Earned on
Total Assets 637, Comprehensive Profitability Analysis 638
Margin Analysis and Asset Efficiency Analysis 640
Margin Analysis 641, Asset Efficiency 641, Accounts
Receivable Analysis 642, Inventory Analysis 643, Fixed
Asset Analysis 644, Asset Efficiency Summary 645
Leverage Analysis 645
Current Ratio 646, Quick Ratio 647, Ratio of Fixed Assets to
Long-Term Liabilities 648, Ratio of Liabilities to Stockholders’
Equity 649, Number of Times Interest Charges Earned 649,
Leverage Summary 650
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