# Quiz 10 : Corporate Governance, Notes to the Financial Statements and Other Disclosures

(a) Net Income as such is complete picture of the business operations but to further analyze and to find out the gains to the shareholders on per share basis EPS (Earning Per Share) is used. Earnings per Share (EPS) is calculated by dividing net income by the average number of shares of common stock outstanding during the year. Split-Stock is nothing but the same number of shares already issued is divided into more number of shares and accordingly the price is also reduced in the same ratio. This is done primarily when the price of shares is going too high and common man will not be able to purchase it or will it too risky to purchase it at such a price so, the company will split the shares and the prices also so that more number of shareholders can be reached while the total raised capital remains the same. As given in the question, S Company reported earnings per share for the year ended December 31, 2016 as \$ 5.80. In the year 2017, the company had a stock split as 4-for-1 that is, for every one share the company is issuing four new shares and consequently, the price also will be divided accordingly. In this case, in the year 2017, the EPS to be reported after the stock split will be: The EPS before the stock split is given as \$ 5.80 and stock split is for every 1 share there are 4 shares issued so, the EPS also will get split accordingly. Adding values to the formula, Stock split basically, means if earlier an individual had 100 shares then after the stock split he will have 400 shares (continuing with the data in the question) while he need not invest amount and also, the earnings per share he was getting was \$ 5.80 for 1 share but now he will get this amount for 4 shares and Earnings per share after the split is \$ 1.45.

(a) Net Income as such is complete picture of the business operations but to further analyze and to find out the gains to the shareholders on per share basis EPS (Earning Per Share) is used. Earnings per Share (EPS) is calculated by dividing net income by the average number of shares of common stock outstanding during the year. Split-Stock is nothing but the same number of shares already issued is divided into more number of shares and accordingly the price is also reduced in the same ratio. This is done primarily when the price of shares is going too high and common man will not be able to purchase it or will it too risky to purchase it at such a price so, the company will split the shares and the prices also so that more number of shareholders can be reached while the total raised capital remains the same. As given in the question, J Company reported earnings per share for the year ended December 31, 2016 as \$ 1.35, on a restated basis, in the year ended June 30, 2017, the company had a stock split as 3-for-1 that is, for every one share the company is issuing three new shares and consequently, the price is after the split is given as \$ 1.35. In this case, in the year 2017, the EPS to be reported after the stock split is: The EPS before the stock split is given as \$ 5.80 and stock split is for every 1 share there are 4 shares issued so, the EPS also will get split accordingly. Adding values to the formula, Stock split basically, means if earlier an individual had 100 shares then after the stock split he will have 400 shares (continuing with the data in the question) while he need not invest amount and also, the earnings per share he was getting after split is given as \$ 1.35 for 3 shares but before split he would have got this amount for 1 share and Earnings per share before the split is \$ 4.05.

On the website of company C, under "governance", information includes about board of directors. It includes "director biographies", "communicating concerns to the board of directors". Other topics includes "board committees", "corporate governance standards", "ethics", "policies", and "insider transactions". No, there aren't other topics that appropriate to have included in those disclosures. The information disclosure on the company's website has a quite complete coverage. Other information can be found under "corporate responsibility" tab.

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