Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stock dividend versus stock split-Firm The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an

image text in transcribed

Stock dividend versus stock split-Firm The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 30% stock dividend and, alternatively, a 5-for-4 stock split. At the present time, the firm's equity account and other per-share information are given as follows: a. Show the effect on the equity accounts and per-share data of a 30% stock dividend. b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split. c. Which option will accomplish Wicker's goal of reducing the current stock price while maintaining a stable level of retained earnings? d. What legal constraints might encourage the firm to choose a stock split over a stock dividend? Data Table - The price per share of common stock after the dividend is $ (Round to the nearest cent.) The earnings per share (EPS) after the dividend is $ (Round to the nearest cent.) Preferred Stock Common Stock (200,000 shares at $1 par) Paid-in capital in excess of par Retained Earnings Total Stockholders' equity $ 0 200,000 900,000 2,640,000 $3,740,000 b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split The number of shares of common stock after the split is shares. (Round to the nearest whole number.) The balance in the common stock account after the split is $ (Round to the nearest dollar.) Price per share Earnings per share Dividend per share $39 $4.00 $1.04 The balance in the paid-in capital in excess of par account after the split is s (Round to the nearest dollar.) The balance in the retained earnings account after the split is $ (Round to the nearest dollar.) Print Done The price per share of common stock after the split is $ . (Round to the nearest cent.) The earnings per share (EPS) after the split is $ . (Round to the nearest cent.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Investments Analysis And Management

Authors: Charles Jones, Nick Jones

11th Edition

0470477121, 9780470477120

More Books

Students also viewed these Finance questions

Question

How do you define Big Data? Why is it difficult to define?

Answered: 1 week ago

Question

What are the organizations reputation goals on this issue?

Answered: 1 week ago

Question

What change do you need to make to achieve the desired position?

Answered: 1 week ago