36

It doesn't go anywhere. It stays in the company as undistributed profit. If the company has too much cash and no opportunities to invest it in further growth, it can be harmful to the company's return on equity. Therefore typically the company will sooner or later choose to distribute it to shareholders either in the form of (regular or extraordinary) ...


19

If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: Invest it back in the company (by buying more assets to generate future profits or paying off debt to reduce interest expense) Distribute it to shareholders (dividends, stock buyback) Do nothing (keep it as cash) On the ...


19

In the end it comes out of earnings, but the earnings don't have to be made that financial year. So yes you can pay dividends despite negative, zero or low earnings in a specific year. This can be a strategic consideration of the company called dividend continuity. This is based on German Law (ยง 150 AktG), but should be applicable elsewhere as well.


18

It has got to do with market perceptions and expectation and the perceived future prospects of the company. Usually the expectation of a company's results are already priced into the share price, so if the results deviate from these expectations, the share price can move up or down respectfully. For example, many times a company's share price may be beaten ...


18

Cash dividends are paid from the company's cash on hand. It doesn't matter where that money comes from. You might have earned it that year, previous years, or (rarely and foolishly) borrowed it or retained it from a stock offering, etc. A cash dividend is funds or money paid to stockholders generally as part of the corporation's current earnings or ...


14

It is true that operation profit comes from gross profit however it is possible for a company to have negative net profit yet have postive cash flow , it has to do with the accounting practice A possible example is that a company has extremely high depreciation expense of fixed asset hence net profit will be negative but cash flow will be positive. Assuming ...


14

They may keep the cash sitting in a bank somewhere as a cash reserve. They may invest it in stocks or bonds in other companies or in government units. They may invest in new factories or equipment. They may pay down debt. Etc. Do they have a "responsibility" to do anything in particular with it? In a sense. A corporation has a legal, fiduciary ...


12

The company's value (which should be reflected in the share price) is not how much money it has in the bank, but something along the lines of 'how much money will it make between now and the end of times' (adjusted for time value of money and risk). So when you purchase a share of a company that has, say, little money in the bank, but expects to make 1M$ ...


9

I can think of a few good reasons: A company, especially public, usually wants their fourth-quarter earnings to be the strongest of the year. That ends each fiscal year on a high note for the company and its investors, which helps public sentiment and boosts stock prices. So, travel agencies and airlines usually like ending their year in October or March, ...


8

Warren Buffet isn't using any special sauce. He looks for value and ignores hype, greed, and fear. He buys what he knows and looks for companies that generate cash and/or are available for a discount of their true value. He explains what he looks for in a company and his reasons for buying it. He has said on numerous occasions, "I look for intrinsic value." ...


8

Your formula for compound growth is slightly off: |*****| (EPS in year 2017 / EPS in year 2013) ^ (1/4) - 1 = (6.00 / 1.00) ^ (1/4) - 1 = 1.565 - 1 = 56.5% So the compound growth is much closer to the arithmetic average growth in the first case (60%), but still does not match the second case. However, the ...


7

You are omitting how the company made 120 million in the previous year and may be facing a shrinking market and thus have poor future prospects. If the company is shrinking, what will the shares be worth down the road. Remember companies like AOL or Blackberry? There was a time they had big profits before things changed which is the part you aren't ...


6

Stating poor estimates in advance will lower your share price to compensate for thge extras boost it gets later ... And may run afoul of stock manipulation laws. More pain than gain likely.


5

When my daughter thought to get into the donut business, I asked what she'd sell the for. $1 each. She sold 12 dozen the first weekend. Sales = $144 Cost of goods = $54 (flour sugar, etc) Profit = $90 Profit would always be less than the total sales (let's ignore odd situations that contradict this, such as an IP / patent sale) as there's the cost of goods,...


5

Sales are how much product a company sold. If a company sells 1,000,000 widgets at $100 a widget then the company as $100,000,000 in sales. Earnings are how much money the company has left after paying all the bills to make, market and sell that product. Thus, companies can often have sales much higher than their earnings because the sales aren't taking ...


5

Assuming you are saying that the company issues 20,000 additional shares of its own stock and sells them for $8 each: The money from the sale is not income and not part of earnings. It is capital and appears on the balance sheet as part of shareholder's equity. With no other transactions, yes, the total of shares outstanding is increased by 20,000 to 100,...


5

IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game ...


5

My grandfather owned a small business, and I asked him that very question. His answer was that year-end closeout is very time-consuming, both before and after EOY (end of year), and that they didn't want to do all that around Christmas and New Year.


5

The question isn't sales but profits. Banks traditionally profit by making loans. Just as with a physical product, there are costs involved, income produced, and the difference between the two is gross profit. From there you can get net profit, and from there you can look at efficiency or profit per share or whatever other metric floats your boat. Or you ...


5

No. Revenue is the company's gross income. The stock price has no contribution to the company's income. The stock price may be affected when the company's income deviates from what it was expected to be.


5

Basically, because people want it. Shareholders like frequent updates because they like to keep tabs on how their money is doing. I haven't read the latest op-ed by Buffett and Dimon, but the idea they're espousing is not new. In general, the anti-quarterly-guidance position is not that companies should never issue projections, but more specifically that ...


5

The Securities Exchange Act of 1934 formed the SEC and granted it the power to oversee all securities as well as the markets, the conduct of brokers, dealers, and investment advisers as well as the financial reports required of publicly traded companies. More specific to your question, its anti-fraud provisions prohibit misstatements or omissions in an ...


4

There are regulatory deadlines in the US set by SEC. You can read about it here. The annual report deadline will remain 90 days for year one and change from 90 days to 75 days for year two and from 75 days to 60 days for year three and thereafter. The quarterly report deadline will remain 45 days for year one and change from 45 days to 40 days for ...


4

Aside from the market implications Victor and JB King mention, another possible reason is the dividends they pay. Usually, the dividends a company pays are dependent on the profit the company made. if a company makes less profit, the dividends turn out smaller. This might incite unrest among the shareholders, because this means that they get paid less ...


4

You need to distinguish a company's guidance from analysts' estimates. A company will give a revenue/earnings guidance which is generally based on internal budgets. The guidance may be aggressive or conservative - some managements are known to be conservative and the market will take that into account to form actual estimates. When you see a headline ...


4

Imagine that I run Justin's Lawnmowing Inc. In the first year of operation I make $1,000. I spend $100 on gas and other consumables to run my lawnmowers. I also spend $1,200 on a new lawnmower for the business. From a cash perspective, the business lost $300 ($1,000 came in, $1,300 went out). From an accounting perspective, though, I have some ...


3

In the Income Statement that you've linked to, look for the line labeled "Net Income". That's followed by a line labeled "Preferred Dividends", which is followed by "Income Available to Common Excl. Extra Items" and "Income Available to Common Incl. Extra Items". Those last two are the ones to look at. The key is that these lines reflect income minus ...


3

Google finance will allow you to import earnings report dates directly to your Google calendar. See screenshot with calendar import button circled in red below.


3

I can't speak authoritatively to your broader question about stocks in general, but in several years tracking AAPL closely, I can tell you that there's little apparent pattern to when their earnings call will be, or when it will be announced. What little I do know: - AAPL's calls tend to occur on a Tuesday more than any other day of the week - it's ...


3

This depends entirely on what the market guesses the news will be and how much of that guess has already been factored into the price. There is no general answer beyond that. Note that this explains the apparently paradoxical responses where a stock good down on good news (the market expected better) or up on bad news (the market expected worse).


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