A 2-for-1 share split will have what effect upon the following items?
$\begin{array} { l l l l l }\text { Total Assets }& \text { Total Shareholders' } & \text { Shares Issued } & \text { Shares Outstanding }\
&\text { Equity }\\end{array}$
A.$\begin{array} { l l l l l }
&& \text { None } &&&& \text {None } &&&&& \text { Increase } &&& \text { Increase } \\end{array}$
B. $\begin{array} { l l l l l }& &\text { None } &&& \text { Increase } &&&&& \text { None } &&&& \text { Decrease } \\end{array}$
C. $\begin{array} { l l l l l }&& \text { Increase } && \text { Decrease } &&&& \text { Increase } &&& \text { Decrease } \\end{array}$
D. $\begin{array} { l l l l l }&& \text { Decrease } && \text { Decrease } &&&& \text { None } &&&& \text { Decrease } \end{array}$

Question

A 2-for-1 share split will have what effect upon the following items?
 $\begin{array} { l l l l l }\text { Total Assets }& \text { Total Shareholders' } & \text { Shares Issued } & \text { Shares Outstanding }\
&\text { Equity }\\end{array}$
A.$\begin{array} { l l l l l } 
  && \text { None } &&&& \text {None } &&&&& \text {  Increase } &&& \text {  Increase } \\end{array}$
B. $\begin{array} { l l l l l }& &\text { None } &&& \text { Increase } &&&&& \text { None } &&&& \text { Decrease } \\end{array}$ 
 C.  $\begin{array} { l l l l l }&& \text { Increase } && \text { Decrease } &&&& \text { Increase } &&& \text { Decrease } \\end{array}$
D. $\begin{array} { l l l l l }&& \text { Decrease } && \text { Decrease } &&&& \text { None } &&&& \text { Decrease } \end{array}$

Quizplus · Accepted Answer

A 2-for-1 share split will double the number of shares outstanding while cutting the share price in half. This will not affect Option C, which is the market capitalization of the company, as it is simply the number of shares outstanding multiplied by the share price. Option A, which is the earnings per share, will be reduced by half because the net income of the company will be spread over twice as many shares. Option B, which is the price-to-earnings ratio, will also be cut in half, as the share price will be divided by two, while the earnings per share will be reduced by half.

A 2-For-1 Share Split Will Have What Effect Upon the Following