Question

Identify the major components of stockholders’ equity by examining the Statement of Stockholders’ Equity. What types of transactions resulted in significant changes in the Stockholder Equity accounts during the most recent year? Did your company make dividend payments to stockholders during the most recent year?

For the Company UPS. Using information from UPS website/yahoo finance

Answer 1

a. Shareholders equity has the following possible components:

• Common stock
• Preferred stock
• Additional paid-up capital-common stock
• Additional paid-up capital- preferred stock
• Retained earnings
• Foreign currency translation reserve
• Available-for-sale securities reserve
• Cash flow hedge reserve
• Revaluation reserve
• Treasury shares
• Non-controlling interest (also called minority interest).

b. Three basic transactions account for most of the changes that occur in shareholder’s equity: sale of stock to investors, recognition of periodic net income or loss and declaration of cash dividends to shareholders.

c. Our company has excess earnings and decides to pay a dividend to common shareholders, an amount is declared along with a payable date. Usually, this is determined quarterly after a company finalizes its income statement and the board of directors meets to review the financials.

Dividends are usually paid in the form of a dividend check, but they may also be paid in additional shares of stock. The standard practice for payment of dividends is a check that is usually mailed to stockholders a few days after the ex-dividend date, the date on which the stock starts trading without the previously declared dividend.

The alternative method of paying dividends is in the form of additional shares of stock. This practice is known as dividend reinvestment and is commonly offered as a dividend payment option by individual companies and mutual funds. Dividends are taxable income regardless of the form in which they are paid. Utility companies often pay out dividends rather than expand.

D. The UPS (NYSE: UPS) Board of Directors had declared a regular quarterly dividend of $0.96 per share on all outstanding Class A and Class B shares. The dividend was payable on Dec. 4, 2019 to shareowners of record on Nov. 18, 2019