Suppose, since its inception, Porter Electronic Controls Inc.s markets have been expanding, and the company has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose, since its inception, Porter Electronic Controls Inc.s markets have been expanding, and the company has enjoyed growth in sales and earnings. Some of its earnings have been paid out in dividends, but some are also retained each year, causing its earnings per share and stock price to grow. The company began its life with only a few thousand shares outstanding. After some years of growth, the stock price was so high that few people could afford to buy a "round lot" of 100 shares. Porter's CEO thought this limited the demand for the stock and thus kept the total market value of the firm below what it would have been if more shares, at a lower price, had been outstanding. Question: To correct this situation (the best policy is). Porter should - Orepurchase it stock split it stock O pay more dividend issue new stock Suppose, since its inception, Porter Electronic Controls Inc.s markets have been expanding, and the company has enjoyed growth in sales and earnings. Some of its earnings have been paid out in dividends, but some are also retained each year, causing its earnings per share and stock price to grow. The company began its life with only a few thousand shares outstanding. After some years of growth, the stock price was so high that few people could afford to buy a "round lot" of 100 shares. Porter's CEO thought this limited the demand for the stock and thus kept the total market value of the firm below what it would have been if more shares, at a lower price, had been outstanding. Question: To correct this situation (the best policy is). Porter should - Orepurchase it stock split it stock O pay more dividend issue new stock
Expert Answer:
Answer rating: 100% (QA)
Solution The correct answer is Split the stock Expl... View the full answer
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor-Yi Tsay, Philip Old
Posted Date:
Students also viewed these accounting questions
-
Larkspur Games Inc. adjusts its accounts annually. The following information is available for the year ended December 31, 2025. 1. 2. 3. 4. 5. Purchased a 1-year insurance policy on June 1 for $1,620...
-
Since hiring a new sales director, Palasz Inc. has enjoyed a 50% increase in sales. The CEO has also noticed, however, that the companys average collection period has increased from 17 days to 38...
-
A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has...
-
One of Red Clay's employee handbook sections covers employee monitoring. An employee filed a complaint with the HR department stating he opposes this monitoring and chooses to opt out. What legal...
-
A bank estimates that demand deposits are, on average, $100 million with a standard deviation of $5 million. The bank wants to maintain a minimum of 8% of deposits in reserves at all times. What is...
-
Refer to Demonstration Exercise 11.1 where we are trying to link tolerance for risk (x) to the % of financial assets that an investor has invested in the stock market (y). The estimated regression...
-
Bad Debt Expense: Percentage of Credit Sales Method} Beliveau Plumbing had the following data for a recent year: Beliveau estimates that \(2.4 \%\) of credit sales will eventually default. Required:...
-
Global Electronics Company (GEC), a U.S. taxpayer, manufactures laser guitars in its Malaysian operation (LG-Malay) at a production cost of $120 per unit. LG-Malay guitars are sold to two customers...
-
Cahalan is a network of clinics performing laser surgery for vision correction. Each clinic tracks the number of patients treated and the number of professional - hours spent on the laser patient...
-
Use the information below and prepare the Multi-Step Income Statement for Hot Place on August 31. Sales $1,250,000 Interest Revenue 25 Sales Discounts 15,000 Sales Returns and Allowances 30,000 Cost...
-
What four financial statements can be found in a firm's 10-K filing? What checks are there on the accuracy of these statements?
-
State four advantages of operating a partnership form of business. (4mks) a) ................................................................................................... b)...
-
1. The given data are the ratings in percent of 12 teacher applicants. 81, 70, 73, 69, 85, 78, 82, 90, 70, 84, 82, 85. Find the mean, median and mode of the given data. 2. Find the mean, median and...
-
AirQual Test Corporation provides on-site air quality testing services. The company has provided the following cost formulas and actual results for the month of February: Revenue Technician wages...
-
Bryant Company reports net income of $22,200. For the year, depreciation expense is $9,200 and the company reports a gain of $5,200 from sale of machinery. It also had a $4,200 loss from retirement...
-
To learn more about the real boat and the real conflict Bala's book is based off, The Boat People by Sharon Bala(stop at "The Nature of Things") and complete the following tool as you are reading....
-
JKL Ltd is considering an investment of Rs. 800 lakhs in a new technology. The project is expected to yield the following earnings before depreciation and taxes over five years: Year Earnings (Rs. in...
-
Cassandra Casey operates the Futuristic Antique Store. She maintains subsidiary ledgers for accounts payable and accounts receivable. She presents you with the following information for October 2019:...
-
Dean and Powell Tax Services Company has 31 branch offices in the nation. Each office has about three to six professional accountants and one to two secretaries. In a busy season, the office manager,...
-
What variables affect profitability? Name two methods for determining profitability when simultaneous changes occur in these variables.
-
Quigley Food Corporation makes two products from soybeans: cooking oil and cattle feed. From a standard batch of 100,000 pounds of soybeans, Quigley produces 20,000 pounds of cooking oil and 80,000...
-
What was required to achieve what he did? Every year, the hospital provided free turkeys to employees during the Thanksgiving holiday. Eventually, the tradition became an entitlement and a...
-
What leadership theories might apply in this case? Angie was an exceptional catheterization laboratory technician who was respected by her teammates. When the director of the cath lab took another...
-
Read Googles Quest to Build a Better Boss, at www.nytimes. com/2011/03/13/business/13hire.html (Bryant 2011). What models of leadership theory are found in Googles design?
Study smarter with the SolutionInn App