Corporations: Organization, Dividends and Income Reporting
You work as a controller at a medium-sized corporation reporting directly to the CFO. The CFO has expressed concerns that the VP of Operations does not understand the earnings per share calculation. The VP of Operations is questioning if earnings manipulation is occurring because his calculation for earnings per share differs from the CFO’s calculation for earnings per share. The VP of Operations uses the following calculation for EPS: Net Income / Shares Issued. The CFO uses GAAP when calculating earnings per share.
The CFO would like for you to prepare a memo addressed to the VP of Operations to explain what is driving the difference in the two earnings per share calculations. While you are open to discuss whatever you think is important, the CFO would like for you to specifically address the following: shares authorized, shares issued, shares outstanding, weighted average shares outstanding, net income and preferred dividends. She would also like for you to explain possible ways that firms can manipulate earnings per share. This may help the VP of Operations understand that the difference in EPS is due to calculation and not earnings manipulation. The CFO has requested that you do not copy definitions from accounting books. She would prefer that you communicate these topics to the VP of Operations in a way that is easy for a non-accounting person to understand. The CFO has requested that she receive a copy of the memo as well.
The memo should be no more than two pages in length, but at least 500 words. As a manager in an organization, you must learn to communicate with executive management in a clear and concise manner. The memo should be formatted using APA style and include the appropriate headings. Your memo will be checked for plagiarism. Please do not copy and paste from the internet.
Be sure to reference the Read ‘em and WEEP policy in writing your memorandum.
Do NOT use a cover page. The memo should be formatted correctly. If formatted correctly, I will know who you are. Upload this assignment to Blackboard.
In class, you must submit a hard copy of the document you uploaded to Blackboard. If the document is more than one page, please staple the pages together. If you do not submit a copy in class, you will receive a zero on the assignment.
This is a formal memo and should be written using formal English. Please do not write like you talk. Stay away from the following phrases: “with that being said, that being said, in regards to, and being that.”
The due date is September 7th.
Remember, the final copy must also be uploaded to Blackboard by September 7th at 8:00 am.