Taylor's,Inc

question 7

Multiple Choice

Taylor's,Inc.stock has plummeted in value and is currently priced at $4 a share.The exchange on which the stock trades requires that the minimum stock price be $10 a share.Taylor's has decided to do a reverse stock split to avoid delisting.However,when it does this,the firm wants the stock price increased to at least twice the minimum exchange required price.Which one of the following stock split ratios is most appropriate for this situation?

• A)1-for-3
• B)1-for-5
• C)2-for-9
• D)3-for-1
• E)5-for-1

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Definitions:

Profitability

A measure of the efficiency and success of a business in generating profits from its operations over a period of time.

Horizontal Analysis

A financial analysis technique that examines the changes in the amounts of specific financial statement items over a period of time.

Base Year Figure

A reference point in time used for comparison in financial and economic analysis to track changes and trends.

Common-sized Income Statement

An income statement in which each line item is expressed as a percentage of sales revenue, facilitating comparison across periods and companies.