On June 5, 2019, ABC Inc. instituted a 4-for-1 stock split. Before the split, ABC Inc. had 200,000 shares outstanding with a price of $168 per share. Show that the stock split for ABC Inc. was a monetary non-event.

Question

Anna Mcgrath

Business

23 December, 15:43

On June 5, 2019, ABC Inc. instituted a 4-for-1 stock split. Before the split, ABC Inc. had 200,000 shares outstanding with a price of $168 per share. Show that the stock split for ABC Inc. was a monetary non-event.

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Aliya Allison · Answer 1

Post split Shares: 800,000

Post split par value: $42

Explanation:

Given:

Number of out standing shares: 200,000 Price per share: $168

ABC Inc. instituted a 4-for-1 stock split, it means that every holder of 1 share will receive 4 shares. So the total of outs standing stock will be increased 4 time, which is:

200,000*4 = 800,000 shares

The price of a split stock is calculated by dividing the face value of the proposed share:

$168 / 4 = $42 per share

So:

Post split Shares: 800,000 Post split par value: $42