| Q. | Net income? | Related Search:
Other - Business & Finance | | | What useful information do we derive from the computation of Net Income? Do not simply answer with the formula for calculating Net Income: Revenue less Expenses. Rather, comment on the value added economic information we receive through the computation of Net Income.
For example, is it a measure of increase in shareholders' wealth or is it a measure of the increase in cash available to the company, etc.?
| | A. | The answer can be both. The net income can be used for dividends or it could be used to purchase capital goods or other materials that can be used for the growth of the company. When a company buys more capital goods, their assets increase, making each share increase in value. In essence, if a company either chooses to pay their shareholders with a dividend or use the extra cash flow to buy more assets, the shareholder's wealth increases.
If the company chooses to use their net income to buy assets, they don't have to borrow money to grow. This means they don't have to pay extra money for interest to lenders who lend money to the company. The value of the stock, also known as the capital gain, will usually increase. It's kind of like real estate. You gain money on it by the appreciated value.
If the company chooses to use their net income to pay a dividend to their shareholders, the shareholder will benefit from the extra money, but the company will not have as much income to pay for capital goods. | | | |
| Q. | net income? | Related Search:
Small Business | | | assets $980,000 Liability $285,000 Capital Stock $50,000 and dividends in $30,000 what is the net income? I have it at 55,000 is that right.
| | A. | income calculations are derived from revenues and expenditures not assets and liabilities. net worth is derived from the data furnished. also, have dividends been declared but not paid? if so they would be a liability; if already paid they are an expenditure. as for capital stock, is it owned free and clear or is it pledged/financed/etc. is there any debt service? | | | |
| Q. | How net income and gross profit are likely to be affected after adding a new product line? | Related Search:
United States | | | hey guys
I have a question about net income and gross profit.
How gross income and net income are likely to be affected when a company add a new line beside their traditional line?
thanks
hey guys
I have a question about net income and gross profit.
How gross income and net income are likely to be affected when a company add a new line beside their traditional line? if a cereal company adds a new line that is related to its previous line ( new cereal and food and grain-based products ) but outside their traditional line, what will happen to their net income and gross profit?
thanks
if a cereal company adds a new line that is related to its previous line ( new cereal and food and grain-based products ) but outside their traditional line, what will happen to their net income and gross profit?
thanks
| | A. | Not a tax question.
But to answer your question, it could go either way. Merely adding a product line does not assure success of the line or an improvement of net profit. If Microsoft came out with a line of perfumes, it would probably fail miserably. Ditto if Nike tried to get in the router market. | | | |
| Q. | How do you determine net income using a stockholder's equity statment? | Related Search:
Investing | | | I need to determine a company's net income for 2009. I have 2008 and 2009's stockholder's equity statement. How do I determine net income?
| | A. | If there has been no other entry that affects stockholder's equity, then the change between the two year balances reflects the net income. If on the other hand the 2009 value is lower than the the 2008 value, then the company experienced a net loss. | | | |
| Q. | The net income reported on the income statement for the current year? | Related Search:
Personal Finance | | | The net income reported on the income statement for the current year
was 275,000. Depreciation recorded on fixed assets and amortization
of patents for the year were 40,000 and 9,000, respectively.
Balances of current asset and current liability accounts at the end
and at the beginning of the year are as follows
End Beginning
Cash $ 50,000 $ 60,000
Accounts receivable 112,000 108,000
Inventories 105,000 93,000
Prepaid expenses 4,500 6,500
Accounts payable (merchandise creditors) 75,000 89,000
What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
$198,000
$324,000
$352,000
$296,000
| | A. | Net Income..............................$ 275,000
Adjustments:
..Depreciation of fixed assets.........40,000
..Amortization of patents.................9,000
Changes in current operating
assets and liabilities:
..Prepaid expenses.......................(2,000)
..Accounts receivable.....................4,000
..Inventories. . . . . . . . . . . . . . . . . 12,000
..Accounts payable.......................14,000
Net cash flow from operations.....$352,000 <<<< | | | |
| Q. | What is the difference between net income and compensation? | Related Search:
Other - Business & Finance | | | I was reading about an accounting firm that had said the net income per partner in the firm and and the average compensation per partner. The net income was $12,000 more than the average compensation. What is the difference between the two?
| | A. | Possibly they retained $12,000 x number of partners, and thus did not distribute it as compensation. But the terms are somewhat tangled, compensation not being a strict term when partners are involved. | | | |
| Q. | How can I figure out just the net income over a certain amount using W2 amounts over $100K? | Related Search:
United States | | | I need to calculate a specific amount owed (a percentage) of the net amount of income earned over $115K for certain years. I have the tax brackets but am unsure which figures to use. For example, if a total income of $125K was earned, I need to know how to figure out the NET income of $10K (the amount over $115). I assume it should be taxed in the higher bracket but I am not sure. Thanks for any info.
| | A. | On page 261 and 262 of IRS Publication 17 you will find charts that I believe will be helpful. This link will take you to Pub. 17; [Link]  | | | |
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