(1 point) There are number of reason, why the companies will buy back its shares
ID: 2561878 • Letter: #
Question
(1 point) There are number of reason, why the companies will buy back its shares. Disney Inc. bought back 74 million of shares paying $7.5 billion dollars in its 2016 accounting year. How Disney Inc. balance sheet was impacted by the common stock buy back?
(1 point) It is typical for the growing companies such as Amazon, Google, Twitter not to share their profits by distributing dividends to shareholders, as they believe that the companies have enough lucrative projects within companies to use cash. Mature companies are known for regular (quarterly) distributions. Dr Pepper Snapple Group Inc. is an American soft drink company, based in Plano, Texas. On May 8, 2017, Dr Pepper Snapple Group, Inc. (NYSE: DPS). made the following announcement: “Dr Pepper Snapple Group, Inc. today announced that its Board of Directors declared a quarterly dividend of $0.58 per share on the company’s common stock. The dividend is payable in U.S. dollars on July, 7 2017, to shareholders of record on June 14th, 2016.”
Explanation / Answer
1) Impact on balancesheet is Cash decreased by 7.5 billion Treasure stock is created by 7.5 Billion which is shown as a deduction to shareholders' equity under balancesheet Journal entry Debit Credit Treasury Stock $ 7.5 billion cash $ 7.5 billion (being shares buyback) 2) Journal entry is Dividend $0.58* no. of shares Dividend Payable $0.58* no. of shares (being Dividend Declared)
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