Omar Company consists of common stock $600,000 and retainedof action: (1) declaring a 5% stock dividend on the 60,000, $10 par value shares outstanding, or (2) effecting a 2-for-1 stock split that will reduce par value to $5 per share. The current market price is $14 per share.
Instructions
Prepare a tabular summary of the effects of the alternative actions on the components of stockholders' equity, outstanding shares, and book value per share. Use the following column headings: Before Action, After Stock Dividend, and After Stock Split.
2007-01-29 13:24:23 · 1 answers · asked by russell s 3 in Business & Finance ➔ Investing
The dividend will reduce equity by the amount paid, $30,000. Book value will decrease by $.50 per share.
The split will cause no change in equity, but will double the number of outstanding shares. Book value of the stock will be 50% of pre-split.
2007-01-29 16:04:27 · answer #1 · answered by MagicalMke 4 · 0⤊ 0⤋