J E Davis Pharmaceuticals Corporation which manufactures biotech drugs has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $5.00 on January 1, 2005 to $21.00 per share on December 31, 2009. Its current net worth statement is as follows: $$\begin{array} { l r }
\text { Common Stock } ( 500,000 \text { shares } ) & \$ 50,000,000 \
\text { Retained Earnings } & \$ 3,500,000 \
\text { Total Net Worth } & \$ 53,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 4 for 1 stock split?

Question

J E Davis Pharmaceuticals Corporation which manufactures biotech drugs has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $5.00 on January 1, 2005 to $21.00 per share on December 31, 2009. Its current net worth statement is as follows: $$\begin{array} { l r } 
\text { Common Stock } ( 500,000 \text { shares } ) & \$ 50,000,000 \
\text { Retained Earnings } & \$ 3,500,000 \
\text { Total Net Worth } & \$ 53,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 4 for 1 stock split?

Quizplus · Accepted Answer

The Answer of J E Davis Pharmaceuticals Corporation which manufactures biotech drugs has been experiencing a tremendous growth in the price of its common stock. The stock price increased from $5.00 on January 1, 2005 to $21.00 per share on December 31, 2009. Its current net worth statement is as follows: $$\begin{array} { l r } 
\text { Common Stock } ( 500,000 \text { shares } ) & \$ 50,000,000 \
\text { Retained Earnings } & \$ 3,500,000 \
\text { Total Net Worth } & \$ 53,500,000
\end{array}$$ A) What changes would occur in the above statement of net worth after a 4 for 1 stock split?

J E Davis Pharmaceuticals Corporation Which Manufactures Biotech Drugs Has