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Strategies & Market Trends : Waiting for the big Kahuna

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To: Benkea who wrote (41673)7/13/1999 9:48:00 PM
From: P.Prazeres  Read Replies (1) of 94695
 
did they but back any stock in the past quarter or year and/or pay dividends?

remember that equity is made up of capital stock + retained earnings.

For example,

Net Income can be $500 for company A.

If they paid out $200 in dividends, then the retained earnings of the equity part of the balance sheet would only show a $300 increase.

Furthermore, if they used $100 to purchase back stock, then the capital stock account would decrease by $100, further reducing equity by $100.

Both are a way of returning capital back to shareholders, thereby reducing their equity in the company.

hope this makes it a bit clearer.

Paulo
stockmotions.com
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