List a few key events and explain why they occurred and financial effects that i
ID: 2340749 • Letter: L
Question
List a few key events and explain why they occurred and financial effects that impacted Microsoft's shareholder's equity in 2016.
STOCKHOLDERS’ EQUITY STATEMENTS
$89,784
(In millions) Year Ended June 30, 2016 2015 2014 Common stock and paid-in capital Balance, beginning of period $68,465 $68,366 $67,306 Common stock issued 688 634 607 Common stock repurchased (3,689) (3,700) (2,328) Stock-based compensation expense 2,668 2,574 2,446 Stock-based compensation income tax benefits 0 588 272 Other, net 66 3 63 Balance, end of period 68,178 68,465 68,366 Retained earnings Balance, beginning of period 9,096 17,710 9,895 Net income 16,798 12,193 22,074 Common stock cash dividends (11,329) (10,063) (9,271) Common stock repurchased (12,283) (10,744) (4,988) Balance, end of period 2,282 9,096 17,710 Accumulated other comprehensive income Balance, beginning of period 2,522 3,708 1,743 Other comprehensive income (loss) (985) (1,186) 1,965 Balance, end of period 1,537 2,522 3,708 Total stockholders’ equity $71,997 $80,083$89,784
Explanation / Answer
Common Stock repurchased - This is repurchase of stock from the market and people by the company itself. The same is done to preserve the stock price. Also it increases the EPS of the stock.
It reduces the equity balance. The face value is reduced from equity section and the premium amount is reduced from retained earnings.
Stock-based compensation expense - This is way of providing incentives to the employees. This is also known as ESOP. This is generally done to increase the confidence of employees.
It increases the equity balance.
Common stock cash dividends - It is the dividend which is paid to the shareholders.
If it is paid out of profit, it reduces the retained earnings of the company.
Other comprehensive income (loss) - This income/loss can be due to:-
Income in other comprehensive income increases the equity balance and loss reduces the equity balance.
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