Question

You have found the following stock quote for RJW Enterprises, Inc., in the financial pages of today's newspaper. 52-WEEK HI LO 89.32 53.17 YLD % PE CLOSE STOCK (DIV) RJW4 VOL 100s 17652 NET CHG 6 2 6 6 ?? If the company currently has 2.61 million shares of stock outstanding, what was net income for the most recent four quarters?

Answer 1

The net profit from stock transactions is calculated by subtracting the total cost of purchasing the shares, including transaction fees, from the total sale proceeds, also accounting for selling fees. Examples demonstrate how to calculate this for transactions involving Nike, Panda Express, and Wal Mart shares.

Step-by-step explanation:

Understanding Stock Profit Calculations

To calculate the net profit from a stock transaction, we must consider the initial purchase price, the current sell price of the stock, and any transaction fees. The formula for net profit is (Current Price x Number of Shares) - (Purchase Price x Number of Shares) - Transaction Fees for both the purchase and the sale.

Let's apply this to the examples provided:

1. Nike: 1000 shares were purchased at $24.50 each and sold at $39.75 each. The net profit would be (1000 x $39.75) - (1000 x $24.50) - (2 x $9.99) = $14,950.02.
2. Panda Express: 800 shares were purchased at $13.50 each and sold at $23.25 each. The net profit would be (800 x $23.25) - (800 x $13.50) - (2 x $10) = $7,780.
3. Wal Mart: 1200 shares were purchased at $35.50 each and sold at $58.75 each. The net profit would be (1200 x $58.75) - (1200 x $35.50) - (2 x $12.99) = $27,641.02.

Investors should also consider other factors such as dividends received during the holding period, which can add to the total return on the investment, and capital gains taxes that may reduce the net profit.