Reference no: EM131604362
Financial Statement Analysis Cases
Please chose one of the case to work on, either Kellogg Case or Weibold Case.
Case 1: Kellogg Company
Kellogg Company is the world's leading producer of ready-to-eat cereal products. In recent years, the company has taken numerous steps aimed at improving its profitability and earnings per share. Presented below are some basic facts for Kellogg.
(in millions) 2014 2013
Net sales $14,580 $14,792
Net income 632 1,807
Total assets 15,153 15,474
Total liabilities 12,302 11,867
Common stock, $0.25 par value 105 105
Capital in excess of par value 678 626
Retained earnings 6,689 6,749
Treasury stock, at cost 3,470 2,999
Number of shares outstanding (in millions) 358 363
Instructions
(a) What are some of the reasons that management purchases its own stock?
(b) Explain how earnings per share might be affected by treasury stock transactions.
(c) Calculate the debt to assets ratio for 2013 and 2014, and discuss the implications of the change.
Case 2: Wiebold, Inc.
The following note related to stockholders' equity was reported in Wiebold, Inc.'s annual report.
On February 1, the Board of Directors declared a 3-for-2 stock split, distributed on February 22 to shareholders of record on February 10. Accordingly, all numbers of common shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this stock split.
On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.80 in the current year and $0.75 in the prior year.
Instructions
(a) What is the significance of the date of record and the date of distribution?
(b) Why might Wiebold have declared a 3-for-2 for stock split?
(c) What impact does Wiebold's stock split have on (1) total stockholders' equity, (2) total par value, (3) outstanding shares, and (4) book value per share?