Currently the price of a stock is $58 a share. The firm's balance sheet is as follows:
Assets Liabilities and Equity
Cash $\$ 10,000,000$ Accounts payable $\$ 20,000,000$
Accounts 250,000,000 Long-term debt $400,000,000$
receivable Common stock ( $\$ 10$ par; $10,000,000$
Inventory $120,000,000 \quad 1,000,000$ shares outstanding)
Plant and 325,000,000 Paid-in capital $90,000,000$
equipment _ Retained earnings $\underline { 185,000,000 }$
$\$ 705,000,000$
$\$ 705,000,000$

Construct a new balance sheet showing the impact of a two-for-one stock split. What will be the new price of the stock?

Question

Currently the price of a stock is $58 a share. The firm's balance sheet is as follows:
​ Assets Liabilities and Equity
Cash $\$ 10,000,000$ Accounts payable $\$ 20,000,000$
Accounts 250,000,000 Long-term debt $400,000,000$
receivable Common stock ( $\$ 10$ par; $10,000,000$
Inventory $120,000,000 \quad 1,000,000$ shares outstanding)
Plant and 325,000,000 Paid-in capital $90,000,000$
equipment _ Retained earnings $\underline { 185,000,000 }$
$\$ 705,000,000$
$\$ 705,000,000$ ​
​
Construct a new balance sheet showing the impact of a two-for-one stock split. What will be the new price of the stock?

Quizplus · Accepted Answer

The Answer of Currently the price of a stock is $58 a share. The firm's balance sheet is as follows:
​ Assets Liabilities and Equity
Cash $\$ 10,000,000$ Accounts payable $\$ 20,000,000$
Accounts 250,000,000 Long-term debt $400,000,000$
receivable Common stock ( $\$ 10$ par; $10,000,000$
Inventory $120,000,000 \quad 1,000,000$ shares outstanding)
Plant and 325,000,000 Paid-in capital $90,000,000$
equipment _ Retained earnings $\underline { 185,000,000 }$
$\$ 705,000,000$
$\$ 705,000,000$ ​
​
Construct a new balance sheet showing the impact of a two-for-one stock split. What will be the new price of the stock?

Currently the Price of a Stock Is $58 a Share $10,000,000\$ 10,000,000$10,000,000

Currently the Price of a Stock Is $58 a Share $\$ 10,000,000$