ZZZ Corporation has declared a stock dividend that pays one share of stock for every 10 shares owned.What will happen to EPS immediately upon the distribution of the stock dividend?
A)There is not enough information to know.
B)EPS will increase by 10%.
C)EPS will not be affected by the stock dividend.
D)EPS will decrease by 10%.

Question

Quizplus · Accepted Answer

EPS will decrease because the number of shares outstanding increases, while net income remains the same, leading to a lower EPS.

ZZZ Corporation Has Declared a Stock Dividend That Pays One