Following is the stockholders' equity section of the 2012 Caterpillar Inc., balance sheet.
|Stockholders Equity ($ millions)||2012||2011||2010|
|Common Stock of $1.00 part; Authorized shares: 2,000,000.000; issued shares (2012, 2011, and 2010 - 814,894,624) at paid in amount||$ 4,481||$ 4,273||$ 3,888|
|Treasury stock (2012: 159,846,131; 2011: 167,361,280 shares and 2010: 176,071,910 shares) at cost||(10,074)||(10,281)||(10,397)|
|Profit employed in the business||29,558||25,219||21,384|
|Accumulated other comprehensive income (loss)||(6,433)||(6,328)||(4,051)|
|Total Stockholders Equity||$ 17,582||$ 12,929||$ 10,864|
a. How many shares of Caterpillar common stock are outstanding at year-end 2012?
b. what does the phrase "at paid-in amount" in the stockholders' equity section mean?
c. At what average cost has Caterpillar repurchased its stock at year-end 2012?
d. Why would a company such as caterpillar want to repurchase its common stock?
The balance sheet shows the overall properties, liabilities and total equity of the company at the end of the year. It also helps in preparing the financial report that is required for the end-users of the company.
Answer and Explanation:
a. 814,894,624 - 159,846,131(Treasury Stock) = 655,048,493 shares
b. The phrase "at paid-in amount" means the additional capital received above the par value.
c. The average cost that Caterpillar repurchased its stock at year-end 2012 = $10,074,000,000 / 159,846,131 = $63.02
d. A company would repurchase its common stock such as caterpillar because they want to decrease the outstanding share and also the earning per share will be increased. This shows a positive impact on the company.
Learn more about this topic:
from Accounting 201: Intermediate Accounting IChapter 4 / Lesson 9