There is an opportunity cost associated with stockholder funds
Yes
it could be because issuing new shares in the market involves more cost such as flotation costs such as underwriting cost and the cost of having to under-price the stock so as to sell the issue.
Answer:The purchase of treasury stock does not affect retained earnings. When the company owns treasury stock, then 'treasury stock' has a debit balance. It is nevertheless presented under equity, with a negative sign.(Technically, when a T-account switches from debit to credit - or the other way around - the sign flips.)Nevertheless, a subsequent sale of treasury stock can affect retained earnings when the amount received is below the cost (a loss is made). This loss is subtracted from retained earnings if there are no cumulative gains on prior sales of treasury stock.
Owner's Equity = Contributed Capital ± Retained Earnings Contributed capital is money that has been contributed to a company by its owners or by a direct investment made by stockholders in a corporation. A company would have stockholders if that company sells shares or stock. Retained earnings is a companys' accumulated profits that have been put back or reinvested into the company. Some examples of retained earnings are supplies expense, rent expense, wages expense, interest expense, utilities expense, sales revenue, cost of goods sold, and depreciation expense. A return on equity (ROE) is the net income divided by stockholders' equity. Assets = Liabilities + Owners Equity
Cost of carrying inventory has an inverse relationship with the earnings of the enterprise. Ergo, the more we lessen the carrying cost of the inventory, the more we can maximize our earnings. -Noli M. Olan
Retained earnings have an opportunity cost associated with them because they can be invested to earn more rather than keeping them idle. For example reatined earnings can be invested in a savings account in a bank and earn interest but if this is not done the are loosing some extra income and so if they are invested somewhere else, the bank rate will be the opportunity that has been lost. Opportunity cost is the real cost of choosing one thing and not another.
Yes
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retained earnings is costfree source of finance comment?
it could be because issuing new shares in the market involves more cost such as flotation costs such as underwriting cost and the cost of having to under-price the stock so as to sell the issue.
Answer:The purchase of treasury stock does not affect retained earnings. When the company owns treasury stock, then 'treasury stock' has a debit balance. It is nevertheless presented under equity, with a negative sign.(Technically, when a T-account switches from debit to credit - or the other way around - the sign flips.)Nevertheless, a subsequent sale of treasury stock can affect retained earnings when the amount received is below the cost (a loss is made). This loss is subtracted from retained earnings if there are no cumulative gains on prior sales of treasury stock.
The cost of external equity is higher because the floatation costs on new equity.
KRE stands for Cost of Retained Earnings or present common stock. It is one of the direct source of capital for any business.
Owner's Equity = Contributed Capital ± Retained Earnings Contributed capital is money that has been contributed to a company by its owners or by a direct investment made by stockholders in a corporation. A company would have stockholders if that company sells shares or stock. Retained earnings is a companys' accumulated profits that have been put back or reinvested into the company. Some examples of retained earnings are supplies expense, rent expense, wages expense, interest expense, utilities expense, sales revenue, cost of goods sold, and depreciation expense. A return on equity (ROE) is the net income divided by stockholders' equity. Assets = Liabilities + Owners Equity
Cost Ratio = expenses/earnings
Cost of carrying inventory has an inverse relationship with the earnings of the enterprise. Ergo, the more we lessen the carrying cost of the inventory, the more we can maximize our earnings. -Noli M. Olan
Earnings Before Tax / Earnings Before Interest and Tax It provides a comparative measure of the cost of debt.