Analyzing and Computing Issue Price, Treasury Stock
Cost, and Shares Outstanding
The following is the stockholders' equity section from Chipotle
Mexican Grill, Inc.'s balance sheet (in thousands, except per share
data).
Shareholders' Equity | December 31,2014 |
---|---|
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of | — |
December 31, 2014 | |
Common stock, $0.01 par value, 230,000 shares authorized, and 36,945 shares | |
issued as of December 31, 2014 | 369 |
Additional paid-in capital | 1,129,003 |
Treasury stock, at cost, 4,476 common shares at December 31, 2014 | -749,885 |
Accumulated other comprehensive income (loss) | -429 |
Retained earnings | 1,722,271 |
Total shareholders' equity | 2,101,329 |
a. Show the computation to derive the $369 thousand for common
stock.
Answer shares X $Answer = Answer thousand (round to the nearest
whole number)
b. At what average price has Chipotle issued its common
stock?
Round to two decimal places.
$Answer
c. How many shares of Chipotle common stock are outstanding as
of December 31, 2014?
Answer thousand
d. At what average cost has Chipotle repurchased its treasury
stock as of December 31, 2014?
Round to two decimal places.
$Answer
e. Select the incorrect reason as to why a company would want to repurchase its own stock.
To offset the dilutive effects of shares issued to employees under stock option plans.
To raise capital for fund future long-term projects.
To mitigate a takeover threat by concentrating the remaining shares in "friendly hands."
To send a signal to the market that the company feels its shares are undervalued.
a. Show the computation to derive the $369 thousand for common
stock.
Answer shares X $Answer = Answer thousand (round to the nearest
whole number)
36945 X 0.01 = 369 Thousand
b. At what average price has Chipotle issued its common
stock?
Round to two decimal places.
30.57=(36945*0.01+1,129,003)/36945
c. How many shares of Chipotle common stock are outstanding as
of December 31, 2014?
Answer thousand
369.45 Thousand (Treasury stock is not considered as outstanding)
d. At what average cost has Chipotle repurchased its treasury
stock as of December 31, 2014?
Round to two decimal places.
167.53=749,885/4,476
e. Select the incorrect reason as to why a company would want to repurchase its own stock.
Incorrect reason : To raise capital for fund future long-term projects
All other three reason are actual reason for carrying our purchase of treasury stock
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