Marston Mfg recently declared a 4 for 1 split for its common shares. Before the

Question

Marston Mfg recently declared a 4 for 1 split for its common shares. Before the split the firm's share price had risen to $600 per share and the firm's CFO felt that this high stock price inhibited trading in the firm's shares. Prior to the split the firm had 8 million shares of stockoutstanding and had net income of $36million. A. Before the stock split what was is Marston's earnings per share? Round 4 decimal places. B) Following the stock split, how many shares of common stock will Marston have outstanding? _______million shares, round to the nearest whole number. C) What are the firms earnings per share after the stock split? Round to 4 decimal places. D) If you owned 100 shares of stock before the split, how much are the total earnings for your shares? Round to the nearest dollar. E) How much are the total earnings on your post split shares? F) Were you better off financially as the holder of 100 shares of pre split stock after the 4 for 1 split?

Explanation / Answer

Ans A EPS = Earning / No of shares o/s =36000000/8000000 4.5 No of shares O/s before split off 8000000 Split of Ratio 4 Ans B No of Shares O/s after Split off 32000000 Ans C EPS after split off = Earning / No of shares o/s =36000000/32000000 1.125 Ans D Total Earning for 100 Shares =100*4.5 450 Ans E Total Earning for 100 Shares after Split off =400*1.125 450 Ans F Total earning before and after is same . So there is no better off after split off

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.