Prady, Inc

question 64

Multiple Choice

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true?

• A) Assets decreased.
• B) Stockholders' equity decreased.
• C) Stockholders' equity increased.
• D) Total stockholders' equity remained the same.

---

Definitions:

EPS Growth Rate

The annual rate of growth of a company's earnings per share (EPS), indicating how the company's profitability is increasing over time.

NPVGO

Net Present Value of Growth Opportunities; an estimate of the value that future investments are expected to generate.

Cash Dividends

Payments made in cash to shareholders, typically derived from a corporation's earnings, as a way of distributing profits back to shareholders.

Fair Price

Generally refers to a valuation that accurately reflects an asset's current worth, considering all relevant factors such as market conditions and future earnings potential.