The Mining Co. has 110,000 shares of stock outstanding. The current market value of the firm is $5.5 million. The company has retained earnings of $1.8 million, paid in surplus of $2.2 million, and a common stock account value of $.11 million. The company is planning a 5-for-1 stock split. What will the retained earnings account value be after the split?

Question

Quizplus · Accepted Answer

Retained earnings are not affected by a stock split. The value remains the same before and after the split, which is $1.8 million in this case.