1. Tipateena Boutiques has the following equity accounts on its balance sheet: Common stock ($1.25 par,...
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1. Tipateena Boutiques has the following equity accounts on its balance sheet: Common stock ($1.25 par, 500,000 shares) Contributed capital in excess of par Retained earnings Total common stockholders' equity $ 625,000 1,375,000 9,200,000 $11,200,000 The current market price of the firm's shares is $60 and the firm's earnings available to common stockholders are $3 million. The firm's dividend payout ratio is 45%. a. What is the firm's book value per share, earnings per share and dividends per share? b. Suppose the firm is considering a 3-for-1 stock split. What would be the impact of the stock split on the above equity accounts? What will be the impact on the post-stock split book value per share, earnings per share, dividends per share, stock price and the total market value of the firm's shares? c. Suppose the firm declares a 15 percent stock dividend. What would be the impact of the stock dividend on the above equity accounts? What will be the impact on the post-stock dividend book value per share, earnings per share and stock price? d. If the firm does not adjust the cash dividend to reflect the stock dividend, what total cash dividends paid pre- and post-stock dividend? 1. Tipateena Boutiques has the following equity accounts on its balance sheet: Common stock ($1.25 par, 500,000 shares) Contributed capital in excess of par Retained earnings Total common stockholders' equity $ 625,000 1,375,000 9,200,000 $11,200,000 The current market price of the firm's shares is $60 and the firm's earnings available to common stockholders are $3 million. The firm's dividend payout ratio is 45%. a. What is the firm's book value per share, earnings per share and dividends per share? b. Suppose the firm is considering a 3-for-1 stock split. What would be the impact of the stock split on the above equity accounts? What will be the impact on the post-stock split book value per share, earnings per share, dividends per share, stock price and the total market value of the firm's shares? c. Suppose the firm declares a 15 percent stock dividend. What would be the impact of the stock dividend on the above equity accounts? What will be the impact on the post-stock dividend book value per share, earnings per share and stock price? d. If the firm does not adjust the cash dividend to reflect the stock dividend, what total cash dividends paid pre- and post-stock dividend?
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Answer rating: 100% (QA)
a To calculate the firms book value per share earnings per share and dividends per share we can use the following formulas Book Value per Share Total ... View the full answer
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
Posted Date:
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