Question

For this assignment, review the intormation provided below on pages 1 and 2. This information comes from three different reports: Capstone Couriers: Round 0, Round 1, and Round 2. TU Round: 0 CAPSTONE Stocks & Bonds C99915 December 31, 2018 Stock Market Summary Company Close Change Shares EPS Dividend Yield (SM) Andrews $34.25 $0.00 2.000.000 $69 $23.97 $2.09 $2.00 5.8% Baldwin $34.25 $0.00 2,000,000 $60 $23.97 $2.09 $2.00 5.8% Chester $34.25 $0.00 2.000.000 $80 $23.97 $2.00 $2.00 5.8% Digby $34.25 $0.00 2,000,000 $23.97 $2.00 $2.00 5.89 Erie S34.25 $0.00 2,000,000 $23.97 $2.00 5.8% Ferris $34.25 $0.00 2.000.000 569 $23.97 $2.09 $2.00 5.896 16.4 MarketCap Book Value PIE 16.4 $2.00 16.4 Stocks & Bonds COURIER 299915 Round: 1 December 31, 2019 Company Change Close $29.78 $24.33 $60 PIE -314.3 -24.6 Andrews Baldwin Chester Digby Stock Market Summary Shares MarketCap (SM) Book Value 2,000,000 $23.88 2.175,164 $53 $23.81 2.282,745 $24.25 2.001,480 $93 $28.01 2.399,957 574 $25.43 2.000.000 $83 $23.13 $27.69 EPS (S0.10) (S0.99) (S0.92) $4.04 (S0.25) $3.01 ($4.48) (59.93) ($6.56) $12.06 (53.39) $7.12 $63 Dividend $0.00 $0.00 50.00 50.00 50.00 53.85 Yield 0.0% 0.0% 0.0% 0.0% 0.0% 9.3% -30.3 $48.31 530.87 $41.37 Erie 11.5 -123.3 Ferris Stocks & Bonds COURIER 099915 Round: 2 December 31, 2020 Stock Market Summary MarketCap Book Value D Company IT د in 00 Close $16.68 $35.34 $20.87 $43.38 $31.22 $48.08 Andrews Baldwin Chester Digby Erie Ferris Change ($13.09) $11.01 ($6.82) (52.95) $0.35 $4.69 Shares 2.000.000 2.175,164 2.334,977 2.001,480 2.756,320 2,000,000 (SM) $33 $77 $49 $87 588 $92 EPS ($1.75) $4.36 (SO.16) $1.82 $1.40 $3.47 $22.13 $28.17 $23.19 $29.63 $27.53 $25.01 Dividend $0.00 $0.00 $1.00 $0.20 $0.00 $1.59 -128.7 Yield 0.0% 0.0% 4.8% 0.5% 0.0% 3.5% وي 18 ية 13.3

Based on the information presented in the pictures above answer the following: All information is provided in the IMAGES

A.            At Round 0, how many shares of common stock did each team have?

ROUND 0: STOCK MARKET SUMMARY

TEAM

# OF SHARES

ANDREWS

BALDWIN

CHESTER

DIGBY

ERIE

FERRIS

B.              In Round 1, what Team, or Teams, issued or sold common stock? In your answer, list each Team and the amount of common stock issued/sold during Round 1.

ROUND 1: STOCK MARKET SUMMARY

TEAM

# OF SHARES ISSUES/SOLD DURING ROUND 1

ANDREWS

BALDWIN

CHESTER

DIGBY

ERIE

FERRIS

C.              In Round 2, what Team, or Teams, issued or sold common stock? In your answer, list each Team and the amount of common stock issued/sold during Round 2.

ROUND 2: STOCK MARKET SUMMARY

   TEAM

# OF SHARES ISSUES/SOLD DURING ROUND 2.

ANDREWS

BALDWIN

CHESTER

DIGBY

ERIE

FERRIS

D,             To date, and based upon information presented in the Capstone Courier, Round 2, what is the total number of shares issues / sold by each team?

ROUND 2: STOCK MARKET SUMMARY

Team TOTAL # OF SHARES ISSUES/SOLD

(TOTAL, BASED ON ROUND 0, ROUND 1, AND ROUND 2).

ANDREWS

BALDWIN

CHESTER

DIGBY

ERIE

FERRIS

E)

1.               What is EPS?

2          When a Team issues, or sells, common stock, what happens to the Team's EPS? Is this good or bad? Explain.   

3.              In Round 2, what was Team Digby's Net Income?

4.              In Round 2, what was Team Erie's Net Income?

5.              Why did Team Digby have less income than Team Erie, but a higher EPS?

Answer 1

A) Round 0

Team                # of shares              

Andrews          2,000,000

BALDWIN        2,000,000

CHESTER       2,000,000

DIGBY             2,000,000            

ERIE                2,000,000

FERRIS           2,000,000

B) Round1

Team                     # OF SHARES ISSUES/SOLD DURING ROUND 1

ANDREWS           0

BALDWIN            175,164

CHESTER           262,745

DIGBY                 1,460

ERIE                    399,957

FERRIS                0

C) Round2

Team                     # OF SHARES ISSUES/SOLD DURING ROUND 1

ANDREWS           0

BALDWIN 0

CHESTER            72,232

DIGBY                  0

ERIE                     356,363

FERRIS   0

D)

Team   TOTAL # OF SHARES ISSUES/SOLD

ANDREWS           0

BALDWIN 175,164

CHESTER            334,977

DIGBY                  1,460

ERIE                     756,320

FERRIS                0

E)

1. EPS?

Team                     EPS

ANDREWS           ($1.75)

BALDWIN $4.36

CHESTER             ($0.16)

DIGBY                   $1.82

ERIE                      $1.40

FERRIS                 $3.47

2. If a company raises capital by selling more shares, the result is a dilution of the holdings of existing shareholders i.e. reduction of EPS .On the surface, this action should result in a share price drop. Even though in some circumstances in the example shows a healthy growth in EPS it is not so as, because the EPS would be increased further if there is no issue in the shares. However, since the price of a stock in the market is based on investor expectations, issuing new shares may be viewed as a positive or a negative for the share price -- or even both -- depending on an investor's time frame.

3. Digby’s net income is given in the Cash flow statement $3,641,000

4. Erie’s net income is given in the Cash flow statement $3,848,000

5. Digby’s net income is less when compared to Erie’s but Eps is higher than Erie’s.Because Erie’s has issued 756,320 shares compared to round 0 but Digby has issued only 1,460 compared to round 0. As given clarification in question no.2 Eps will be diluted by selling more shares even though there is increase in revenue.