1. Solution of Dividend
All right, let's get started with this equity schedule in the common equity
section. Well, the ending balance, year zero is over here. It's gonna be
$46 million right there. We can link the beginning balance back to the
ending balance for year zero, here we're gonna do an auto sum,
so Alt+equals Enter, and then we can pull these across like this
and like this, and now we can link net income over to the
top of the cash flow statement here, pull that across Ctrl+R for fill
right. Payout ratio is going to be the dividend divided by the net
income like that, and then we can highlight across Ctrl+R for a fill
right. Next up, retained earnings. So we wanna link in here,
like this across to five million dollars, gives us a starting point,
then we can link the beginning balance over to this like that,
the net income, we just have that a moment ago up here,
so we can link there. Now we want the dividends to come out
as being negative, so we'll say equals negative
a dividend, which is right there, and now we're gonna do an auto
sum with Alt+Equals just like that. Now we can grab this whole block,
highlight across Ctrl+R or fill right. Now, let's look to our cash flow
statement here in the same section, cash from financing, our share buyback
happened here, but the payment of dividends is gonna be here,
we're gonna link that across to this line right here, and then we
can highlight across and control or fulfill rate, again, it's a cash outflow
for the payment of that dividend, so it's a negative figure,
now we can link here to ending balances. First for equity capital,
which is not changing at all, and then we wanna link to retained
earnings, which is right here. Once we have these two highlight across Ctrl+R
for a fill right. Again, the main take away here is that we
still have a cash outflow happening, it's happening on a different line
item versus the Share buy back, which would have been right there.
We can see that equity capital is not changing at all because the
company is not buying back any shares, but the payment of the dividend
did have an impact here on retained earnings.
2. Let's practice!