Look at one of the country’s leading income tax software company – Intuit, paren

Question

Look at one of the country’s leading income tax software company – Intuit, parent company of TurboTax. Above is a 2 year snapshot of Intuit’s Statement of Stockholders’ Equity. Using this information, answer the following questions:

1. What does this data tell you about Intuit’s method of compensating its employees? Use the data in your answer.

2. In the two years above, what has been the overall change in Stockholders’ Equity? Does this represent a strength or weakness in Intuit’s business?

3. How would you figure out the gain or loss on a Treasury Stock transaction? (just use words, no data necessary)       

Tables of Contents INTUIT INC CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Accumulated Other Common Stock Additional Total Paid-In Shars Amount Capital Treasury Comprehensive Retained Stockholders Dollars in millions, shares in thousands) Balance at July 31, 2014 Comprehensive income Issuance of stock under employee stock plans net of shares withheld for employee taxes Stock repurchases under stock repurchase programs Dividends and dividend rights declared (S1.00 per Stock Earnings Equity Oss 284,950 $ 3 S 3,558 $ (6,430) S (2) $ 5,949 $ 3,078 337 (28) 365 6,565 107 107 (13,809) (1,245) (1,245) share) Tax benefit from share-based compensation plans Share-based compensation expense Balance at July 31, 2015 Comprehensive income Issuance of stock under employee stock plans net of shares withheld for employee taxes Stock repurchases under stock repurchase programs Dividends and dividend rights declared ($1.20 per share) Tax benefit from share-based compensation plans Share-based compensation expense Balance at July 31, 2016 (287) (287) 85 257 2,332 977 257 277,706 3 4,007 (7,675) (30) 6,027 979 4,963 89 89 (24,816) (2,264) (2,264) (319) (319) 59 287 4,442 287 257,853 3 (9,939) (32) 6,687 1,161

Explanation / Answer

1. As per the data, Intuit compensates its employees by giving them the employees stock options. They have issued shares for both the years 2015 and 2016 under the scheme of employees stock options.

In 2015, they issued 6,565 (thousands) shares worth $107 (millions).

In 2016, they issued 4,963 (thousands) shares worth $89 (millions).

2. Overall change in stockholder's equity

= 1,171 (2332 - 1161)/2332 * 100

= 50.21%

Decrease by 50.21% form the year 2015 to year 2016. This represents strength in the business of the company because repurchase of stock is generally done with a viewpoint to boost the share price and provide shareholder value

3. Determine the number of shares and the price per share at which your company repurchased its stock. Multiply the number of shares by the price per share to calculate the repurchase cost. Subtract the amount for which you initially sold the shares from the amount you paid to repurchase them to determine the profit or loss.

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