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Accounting, Finance, SPSS
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English (U.S.)
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Analyzing Stockholder’s Equity to Recommend Strategies for Generating Cash

Coursework Instructions:

The purpose of this assignment is to analyze stockholders' equity to recommend strategies for generating cash. Understanding a company's position as it relates to stockholders and stockholders' equity is important when considering options and making decisions related to the strategies that should be implemented to generate cash for the company.
The chief executive officer (CFO) of the company wants to generate cash for the organization and has tasked you to review the current stockholders' equity position for the company and use your findings to recommend strategies for generating cash flow. The CEO has requested you summarize your findings in a memo that is addressed to the CFO, but one that could be shared with other stakeholders.
Refer to the “Annual Reports for Approved Companies” and access the Form 10-K for one of the companies. Review and study the following information related to stocks:
Identify and discuss the current types of stock, such as common or preferred stock, currently issued, and outstanding. Include a narrative description along with the values and number of shares found on the balance sheet.
Identify the presence of treasury stock and its impact on overall stockholders' equity. If the company does not have treasury stock, indicate the absence of treasury stock and provide some discussion as to why the company may not have purchased back any of its originally issued stock.
Review the notes to the financial statements to determine if the company has any convertible bonds and summarize the characteristics of those bonds. If there are no convertible bonds in the notes, discuss why a company may want to consider convertible bonds in the future.
Discuss the pros and cons of issuing new stock, reissuing treasury stock (if applicable), and issuing convertible bonds.
In addition, include your recommendations on how the company could generate cash from issuing new common stock, preferred stock, convertible bonds or reissuing treasury stock. Support your recommendations with examples that show the impact on cash.
General Requirements:
Using the five items above as a guide, summarize your findings and recommendations for the CFO.
While APA style is not required for the body of this assignment, solid academic writing is expected, and documentation of sources should be presented using APA formatting guidelines, which can be found in the APA Style Guide, located in the Student Success Center.
This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

Coursework Sample Content Preview:

Analyzing Stockholder’s Equity
Student’s Name
Institutional Affiliation
Course
Instructor
Date
Analyzing Stockholders’ Equity
To the CFO,
Stockholders’ equity is an integral part of the balance sheet. It includes three line items of common and preferred stock, retained earnings, and treasury stock. It is recommended that in generating cash flow for the company, we use financial ratios, in particular, Leverage, Profitability, and Market Value ratios. Debt to Equity, D/E, is a leverage ratio that is arrived at by dividing total liabilities and stockholders’ equity. Return on equity is a profitability ratio that is derived by dividing net income by stockholders’ equity. Lastly, the Book Value per share is a market value ratio.
To delve into this further, we access form 10-k of Pepsico Inc. This company has a common stock of 1,380million issued and outstanding shares at year-end. It has a common stock: Authorized 3,600million shares, at $1.67 par value, issued and outstanding 1,380million shares of $3,933million (23+3,910) value. In addition, it has a treasury stock (repurchased common stock) of 487million shares of $38,446million value. It has no convertible bonds. A convertible bond is a type of debt security that provides an investor with a right or an obligation to exchange the bond for a predetermined number of shares in the issuing company at certain times of a bond’s lifetime (Corporate Finance Institute, n.d.).
Your company may want to consider issuing convertible bonds in the future because these bonds attract a low coupon rate. As such, your company will benefit from the lower interest expense, which in itself is tax-deductible, thereby reducing your tax obligation...
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