Thelma and Louie's Inc started the year with a balance of retained earnings of $547 million and ended the ear with retained earnings of $594 million. The company paid dividends of $37 million to the preferred stockholders and $77 million to common stockholder.
Calculate thelma and louie's net income to common stockholders for the year. (Enter in millions of dollars)
Net Income in millions.
Hi, I need the problem worked if you can show me thank you.
finance - steve, Sunday, February 10, 2013 at 12:24pm
(547+594)/(37-77)= Net Income: $486.05 million dollars.
also i need an example if this is not right.
To calculate the net income to common stockholders for the year, we need to use the retained earnings formula:
Net Income = Ending Retained Earnings - Beginning Retained Earnings + Dividends
Given:
Beginning Retained Earnings = $547 million
Ending Retained Earnings = $594 million
Dividends paid to common stockholders = $77 million
Plugging in the values, we have:
Net Income = $594 million - $547 million + $77 million
= $47 million + $77 million
= $124 million
Therefore, Thelma and Louie's net income to common stockholders for the year is $124 million.
To calculate Thelma and Louie's net income to common stockholders for the year, we need to use the formula:
Net Income = Ending Retained Earnings - Beginning Retained Earnings - Dividends Paid
Given:
Beginning Retained Earnings = $547 million
Ending Retained Earnings = $594 million
Dividends Paid to Preferred Stockholders = $37 million
Dividends Paid to Common Stockholders = $77 million
Applying the formula:
Net Income = $594 million - $547 million - ($37 million + $77 million)
Simplifying:
Net Income = $594 million - $547 million - $114 million
Net Income = $37 million
Therefore, Thelma and Louie's net income to common stockholders for the year is $37 million.
Let's go through an example to understand the steps:
Example:
Beginning Retained Earnings = $400 million
Ending Retained Earnings = $430 million
Dividends Paid to Preferred Stockholders = $20 million
Dividends Paid to Common Stockholders = $50 million
Applying the formula:
Net Income = $430 million - $400 million - ($20 million + $50 million)
Simplifying:
Net Income = $430 million - $400 million - $70 million
Net Income = $30 million
Therefore, the net income to common stockholders for the year in this example is $30 million.