Exam 17: Dividends and Payout Policy

Alfonzo's Italian House has 25,000 shares of stock outstanding with a par value of $1 per share and a market price of $28 a share.The firm just announced a 5-for-3 stock split.What will the market price per share be after the split?

The board of directors of Wilson Sporting Equipment met this afternoon and passed a resolution to pay a cash dividend of $0.42 a share next month.In relation to this dividend,today is referred to as which one of the following dates?

Randall's,Inc.has 20,000 shares of stock outstanding with a par value of $1.00 per share.The market value is $12 per share.The balance sheet shows $42,000 in the capital in excess of par account,$20,000 in the common stock account,and $50,500 in the retained earnings account.The firm just announced a 5 percent (small)stock dividend.What will the balance in the retained earnings account be after the dividend?

Which one of the following statements related to stock repurchases is correct?

The balance sheet for Apple Pie Corp.is shown here in market value terms.There are 5,000 shares of stock outstanding. The company has declared a dividend of $1.80 per share.The stock goes ex-dividend tomorrow.Ignore any tax effects.What will the price of the stock be tomorrow?

Prezario's has 25,000 shares of stock outstanding with a par value of $1 per share.The current market value of the firm is $847,000.Currently,the retained earnings account balance is $428,000 and the capital in excess of par value account balance is $187,000.The company just announced a 3-for-1 stock split.What is the common stock account balance after the stock split?

Steve purchased 300 shares of Alpha Beta stock on May 9.On May 15,he purchased another 300 shares and then on May 22 he purchased a final 400 shares of Alpha Beta stock.The company declared a dividend of $1.60 a share on April 30 to holders of record on Friday,May 23.The dividend is payable on June 2.How much dividend income will Steve receive on June 2 from Alpha Beta?

Southern Fried Chicken has 8,000 shares of stock outstanding with a par value of $1 per share and a market value of $34 per share.The balance sheet shows $45,000 in the capital in excess of par account,$8,000 in the common stock account,and $152,000 in the retained earnings account.The firm just announced a 5 percent stock dividend.What will total owners' equity be after the dividend?

Green Roof Motels has more cash on hand than its operations require.Thus,the firm has decided to pay out some of its earnings in the form of cash to its shareholders.What are these payments to shareholders called?

A stock split:

S.L.Moffatt,Inc.has paid a quarterly dividend of $1.20 per share for the last ten quarters.Which one of the following is most apt to cause the firm to reduce the amount of its next dividend payment?

Bell Weather Markets has recently sold for as little as $8 a share and as much as $15 a share.The difference between these two prices is referred to as the:

The Peace River Corporation has 62,000 shares of stock outstanding at a market price of $48 a share.The company has just announced a 3-for-2 stock split.How many shares of stock will be outstanding after the split?

HJ Corporation has excess cash and has opted to buy some of its shares of outstanding common stock.What is this process of buying called?

Webster United is paying a $1.10 per share dividend today.There are 350,000 shares outstanding with a market price of $25 per share.Ignore taxes.Before the dividend,the company had earnings per share of $1.74.As a result of this dividend,the:

Stock repurchase programs appear to becoming more popular with business firms.Explain the appeal of these programs as compared to that of cash dividend programs from the stock issuer's point of view.

Mario's has 18,000 shares of stock outstanding with a par value of $1 per share and a market price of $4 a share.The balance sheet shows $18,000 in the common stock account,$368,000 in the paid in surplus account,and $64,000 in the retained earnings account.The firm just announced a 5-for-1 stock split.What will the paid in surplus account value be after the split?

Plyler Cabinets declared a dividend of $1.20 a share on May 15 to holders of record on Monday,June 1.The dividend is payable on June 15.Sara purchased 500 shares of Plyler Cabinets stock on Friday,May 29.How much dividend income will she receive on June 15 from Plyler Cabinets?

You own 2,200 shares of Deltona Hardware.The company has stated that it plans on issuing a dividend of $0.42 a share at the end of this year and then issuing a final liquidating dividend of $2.90 a share at the end of next year.Your required rate of return on this security is 16 percent.Ignoring taxes,what is the value of one share of this stock to you today?

Jenningston Mills has a market value equal to its book value.Currently,the firm has excess cash of $1,200,other assets of $5,800,and equity valued at $3,750.The firm has 250 shares of stock outstanding and net income of $420.What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?