? Why must preferred stock dividends be
subtracted from net income in computing earnings per share? Why is common stock
usually not issued at a price that is less than par value?
? What three conditions must exist
before a cash dividend is paid? Contract the effects of a cash dividend and a
stock dividend on a corporation’s balance sheet.
? Why are companies required to prepare
a statement of cash flows? Why is the statement of cash flows divided into
three sections? What does each section tell you about the operations of a
? What are some common ratios used to analyze
financial information? Which are the most important? What are some examples of
how ratios are used in the decision making process?