In Note 1 of Item 8, Apple states it effected a common stock split on June 6,
Question:
In Note 1 of Item 8, Apple states it effected a common stock split on June 6, 2014. A stock split increases the number of shares outstanding and decreases the stock price. For example, a 2-for-1 stock split would double the number of shares outstanding and cut the price in half. A stock split is an action taken by some companies when they believe the stock price has hit a ceiling and isn’t growing to the extent they believe it should be. By splitting the stock, which cuts the price significantly, making it more affordable for investors, it can increase demand for the stock and help drive the price up.
At the time of the stock split, Apple’s stock was trading for a price just under $700 per share, which wasn’t very affordable for many investors.
How large of a stock split did Apple effect on June 6, 2014 to make the stock more affordable with the hope it would increase demand and drive the price up?
(NOTE: The stock split retroactively adjusted all share and per share information, so it did not impact the stock price growth )
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw