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Fin Acc: Chapter 11 Vocab: Stockholders Equity


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Authorized Shares
The maximum number of shares a corporation may issue as indicated in the corporate charter. (page 529)
Issued shares
The number of shares sold or distributed to stockholders.
Outstanding Shares
The number of shares issued less the number of shares held as treasury stock.
Par Value
An arbitrary amount that represents the legal capital of the firm.
Additional Paid-in Capital
The amount received for the issuance of stock in excess of the par value of the stock.
Retained Earnings
Net income that has been made by the corporation but not paid out as dividends.
Callable Feature
Allows the firm to eliminate a class of stock by paying the stockholders a specified amount.
Convertible Feature
Allows preferred stock to be exchanged for common stock.
Cumulative Feature
The right to dividends in arrears before the current-year dividend is distributed.
Participating Feature
Allows preferred stockholders to share on a percentage basis in the distribution of an abnormally large dividend.
Treasury Stock
Stock issued by the firm and then repurchased but not retired.
Dividend payout ratio
The annual dividend amount / annual net income.
Retirement of Stock
When the stock is repurchased with no intention to reissue at a later date.
Stock Dividend
The issuance of additional shares of stock to existing stockholders.
Stock Split
The creation of additional shares of stock with a reduction of the par value of the stock.
Statement of Stockholders' Equity
Reflects the differences between beginning and ending balances for all accounts in the Stockholders' Equity category of the balance sheet.
Book value per share
Total stockholders equity / # of shares of common stock outstanding.
Market value per Share
The selling price of the stock as indicated by the most recent transactions.

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