Franklin Group has declared a share dividend that pays 5 shares for every 100 shares owned.What will happen to EPS immediately upon the distribution of the share dividend?
A)EPS will increase by 5%.
B)EPS will decrease by 5%.
C)EPS will not be affected by the share dividend.
D)EPS will decrease by 4.76%.

Question

Quizplus · Accepted Answer

EPS will decrease by 4.76% because the number of shares outstanding increases by 5%, diluting the earnings per share.

Franklin Group Has Declared a Share Dividend That Pays 5