A Corporation Has 3 Million Shares of Outstanding Stock Issued

question 17

Multiple Choice

A corporation has 3 million shares of outstanding stock issued at market price of $5.It also has $45 million of retained earnings on its balance sheet.It announces a 2 for 1 stock split on August 1.The market price of the stock on that day is $12 per share.Which of the following would be the implication of this stock split?

• A)Contributed capital will increase by $36 million
• B)Retained earnings will decrease by $36 million
• C)Dividends payable will increase by $36 million
• D)No accounting entry will be made on this announcement.

Understand the significance and calculation of the current ratio.

Recognize solvency and profitability measures in financial analysis.

Analyze the interests of shareholders towards company profitability, solvency, and marketability.

Calculate and interpret non-GAAP financial performance measures.

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Definitions:

Long-Term Illness

A health condition that is persistent or recurring over an extended period, often affecting an individual's lifestyle and requiring ongoing management.

Single-Parent Families

Households headed by one adult who is responsible for raising children.

Father-Only Families

Family units where the child or children are raised exclusively by their father.

Increasing

The process or action of becoming larger or greater in size, amount, number, or degree.