Not yet after I,m finished with it here.
Okay lets get started. Now we the company is buying back stock due to the treasury stock being purchased and the other equity value purchased and I will explain that shortly.
Now we all know that to buy something cost money and that is an asset be it gained from debt,depreciation or amortization the writing down of cost associated to running a business and in this case it is cost of goods as well as administration cost associated to that business that can be both put of by the taking on of debt.
Take for example you need film and you buy it with debt holding the film as collateral but until one uses the film it is not taken into account so it is put under capital surplus until it is used due to being commodity to the business but not an off the shelf commodity that is goods produced and that is very different in nature as I will explain.
Many get thrown off reading financials because they try to apply the treasury stock with what is happening with the other equity over a quarter well you can't. it is often why a year end is moved to take in all transactions that take place in as far as the buying and selling of the companies shares in that period and if you understand that you would no that every year end for a company the volume dries up.
Lets look at the relationship of the treasury stock, common shares, other equity and share holder liability debt used to buy back shares as well as depreciation associated with the asset should it be sold for less then purchased for.
Treasury stock is the price paid for the repurchase stock at market value. other equity is the price given to what the stock is truly worth. Common stock is the following yearly value of stock that was not resold held if you like and debt is an on going cost to what was purchased over the initial debt associated in selling the shares in the primary market place noted under the S1 filing from the underwriter the one selling the shares for the company.
Now can there be a secondary offering of those same shares? Yes there can but can't be sold for less then the future asset value of the company.
Now when I say future that is not to say they can't be sold for less then the previous primary offering they can and there is were you will have dilution to the former shareholders who purchased at the asking price. Good rule of thumb is to wait to value the asset value movement not forgetting to add the depreciation value as well as the amortization value to your asset value.
So what does his all mean well to the train eye a sell or a buy rating on the stock and that is were your DD comes in to really look at every thing to come up with a future valuation once ever thing is taken into account and don't be listening to others because she is a dog eat dog world and you want to be that alfa dog not the runt of the litter.
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