Exam 17: Dividends and Payout Policy

The market value balance sheet for MZ Toys reflects cash of $32,000, fixed assets of $687,000, debt of $285,000, and equity of $479,000. The firm declared a stock dividend of 15 percent and tomorrow is the ex-dividend date (the chronology for a stock dividend is similar to that for a cash dividend). There are 12,000 shares outstanding. What is the ex-dividend stock price?

A reverse stock split is defined as a(n):

East Coast Marina has 65,000 shares of stock outstanding. The current market value of the firm is $2.87 million. The company has capital in excess of par value of $1.09 million on its balance sheet. The company is planning a stock split of five-for-four. What will be the market price per share after the split?

Which one of the following favors a low dividend policy?

Purvis Lawn Products has 5,400 shares of stock outstanding at a market price of $6.37 a share. What will the market price per share be if the company does a reverse stock split of one-for-three?

Stock splits can be used to:

Which one of the following does not affect the total equity of a company but does increase the number of shares outstanding?

Which one of the following tends to decrease the ability of a shareholder to create his or her own homemade dividend policy?

Tucker's National Distributing has a current market value of equity of $32,400. Currently, the firm has excess cash of $2,100, total assets of $22,400, net income of $3,210, and 800 shares of stock outstanding. The company is going to use all of its excess cash to repurchase shares of stock. What will the stock price per share be after the stock repurchase is completed?

Della's Pools has 36,000 shares of stock outstanding with a par value of $1 per share and a market price of $38 a share. The company just announced a stock split of four-for-three. How many shares of stock will be outstanding after the split?

TJ's has a market value equal to its book value. Currently, the firm has excess cash of $218,500, other assets of $897,309, and equity of $547,200. The firm has 40,000 shares of stock outstanding and net income of $59,800. Management has decided to spend 15 percent of the excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?

Western Mountain Water has 35,000 shares of stock outstanding with a par value of $1 per share. The current market value of the firm is $948,000. The balance sheet shows a capital in excess of par value account balance of $72,800 and retained earnings of $368,400. The company just announced a stock split of three-for-one. What will be the capital in excess of par value account balance after the split?

Kurt's Market has 16,000 shares of stock outstanding with a par value of $1 per share and a market value of $17 per share. The balance sheet shows $16,000 in the common stock account, $236,000 in the capital in excess of par account, and $314,800 in the retained earnings account. The firm just announced a stock dividend of 65 percent. What will be the balance in the retained earnings account after this dividend?

City Center Pharmacy has 24,500 shares of stock outstanding with a par value of $1 per share and a market value of $18.90 a share. The company just announced a reverse stock split of three-for-five. What will be the market value per share after the reverse stock split?

Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7. Ted purchased 100 shares of Fast Deliveries stock on Thursday, July 8. Fast Deliveries declared a dividend on June 20 to shareholders of record on July 12 and payable on August 1. Which one of the following statements concerning the dividend paid on August 1 is correct given this information?

A stock split:

Webster United is paying a dividend of $1.09 per share today. There are 225,000 shares outstanding with a market price of $31.17 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $2.11. As a result of this dividend, the:

Which one of the following involves a payment in shares that increases the number of shares a shareholder owns but also decreases the value per share?

A small stock dividend:

Which one of the following statements is correct?