Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 14.13P
Stock split: Firm Growth Industries’ current stockholders’ equity account is as follows:
| $400,000 | |
| Common stock (600,000 shares at $3 par) | $1 ,800,000 |
| Paid-in capital in excess of par | $200,000 |
| Retained earnings | $800,000 |
| Total stockholders’ equity | $3,200,000 |
- a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split.
- b. Indicate the change, 1f any, expected 1f the firm declares a 1-for-1 ½ reverse stock split.
- c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split.
- d. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split.
- e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split.
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What effect will a two-for-one stock split have on the following items found on a firm's financial statements?
a. Earnings per share $5.00. Round your answer to the nearest cent.
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b. Total equity $10,000,000. Round your answer to the nearest dollar.
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$
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$10,000,000
c. Long-term debt $4,600,000. Round your answer to the nearest dollar.
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$
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$1,689,000
e. Number of shares outstanding 800,000. Round your answer to the nearest whole number.
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800,000
f. Earnings $4,000,000. Round your answer to the nearest dollar.
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The owners' equity accounts for Mars International are shown here:
Common stock ($.50 par value)
Capital surplus
Retained earnings
Total owner's equity
Please show the equity accounts will change if:
a. The company declares a 5-for-1 stock split. How many shares are outstanding now? What is the
new par value per share?
b. The company declares a 1-for-4 reverse stock split.
$20,000
210,000
587,300
$817,300
c. The balance sheet for Mars International is shown below in Market value terms. There are 12,000
shares of stock outstanding.
Market Value Balance Sheet
Equity $817,300
Cash
$ 99,660
Fixed assets 717,640
Total
$817,300
Total $817,300
The company has declared a dividend of $1.45 per share. The stock goes ex dividend tomorrow.
Ignoring any tax effects, what is the stock selling for today? What will it sell for tomorrow? What
will the balance sheet look like after the dividends are paid?
d. suppose the company has announced it is going to repurchase $17,400 worth of stock. What effect…
e
Stock split-Firm Growth Industries' current stockholders' equity account is as follows:
Preferred stock
$ 400,000
Common stock (100,000 shares at $2 par)
Paid-in capital in excess of par
Retained earnings
200,000
200,000
800,000
Total stockholders' equity
$1,600,000
a. Indicate the change in par value and the number of shares outstanding if the firm declares a 2-for-1 stock split.
b. Indicate the change, in par value and the number of shares outstanding if the firm declares a 1-for-1½ reverse stock split.
C. Indicate the change in par value and the number of shares outstanding if the firm declares a 3-for-1 stock solit.
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Chapter 14 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 14.1 - What two ways can firms distribute cash to...Ch. 14.1 - Why do rapidly growing firms generally pay no...Ch. 14.1 - The dividend payout ratio equals dividends paid...Ch. 14.2 - Prob. 14.4RQCh. 14.2 - Prob. 14.5RQCh. 14.2 - What benefit is available to participants in a...Ch. 14.3 - Does following the residual theory of dividends...Ch. 14.3 - Contrast the basic arguments about dividend policy...Ch. 14.4 - Prob. 14.9RQCh. 14.5 - Describe a constant-payout-ratio dividend policy,...
Ch. 14.6 - Why do firms issue stock dividends? Comment on the...Ch. 14.6 - Compare a stock split with a stock dividend.Ch. 14 - Prob. 1ORCh. 14 - Prob. 14.1STPCh. 14 - Prob. 14.1WUECh. 14 - Prob. 14.2WUECh. 14 - Prob. 14.3WUECh. 14 - Prob. 14.4WUECh. 14 - Prob. 14.5WUECh. 14 - Dividend payment procedures At the quarterly...Ch. 14 - Prob. 14.2PCh. 14 - Prob. 14.3PCh. 14 - Dividend constraints The Howe Companys...Ch. 14 - Prob. 14.5PCh. 14 - Low-regular-and-extra dividend policy Bennett Farm...Ch. 14 - Alternative dividend policies Over the past 10...Ch. 14 - Alternative dividend policies Given the earnings...Ch. 14 - Stock dividend: Firm Columbia Paper has the...Ch. 14 - Cash versus stock dividend Milwaukee Tool has the...Ch. 14 - Stock dividend: Investor Sarah Warren currently...Ch. 14 - Stock dividend: Investor Security Data Company has...Ch. 14 - Stock split: Firm Growth Industries current...Ch. 14 - Prob. 14.14PCh. 14 - Stock split versus stock dividend: Firm Mammoth...Ch. 14 - Prob. 14.16PCh. 14 - Prob. 14.17PCh. 14 - Prob. 14.18PCh. 14 - Prob. 14.19P
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