Shareholder Equity

Let us start with shareholder's equity now.

Equity Schedule

Project shares outstanding
Reference back to historical count (flat-line)

Purpose: Need EPS (Earnings Per Share) for share repurchase

Will factor in share repurchase later
Calculate remaining line items:
Leave interest expense / income blank
Will complete later with interest schedule

A Simplified Equity Schedule

Equity Schedule – Overview

Setup:

Line-items
Input selected historicals

Project:

Share repurchase, option proceeds, and new shares from exercises options
Dividends and future equity balance
Full blown Equity Schedule Items and Flow

Flow of equity schedule:

Beginning equity balance

Add: Net income

Add: Issuance of shares

Less: Repurchases

Less: Dividends paid

Less: Options Proceeds

Add/Less: Effects of exchange rates on cash

Share repurchase assumptions

1. Flow of share repurchase assumptions:
2.Current year EPS
3.Assumed current year EPS multiple
4.Project share price
5.Project shares repurchased
6.Multiply (3) and (4) to calculate the rupee amount in shares repurchased

ESOP (Employees Stock Ownership Plan) related assumptions

Treasury Stock Method (TSM)

a)The net of new shares that are potentially created is calculated by taking the number of shares that the in-the-money options purchase.
b)Then subtracting the number of common shares that the company can purchase from the market with the option proceeds.
c)This adds to total number of shares and lower EPS in future years.

Linking Equity Schedule

Link ending balances calculated in the shareholder’s equity schedule to the balance sheet.

Link repurchases, options, dividends to cash flow statement.