Concept explainers
a.
To calculate: The effect of a two-for-one split on the capital account of Squash Delight Inc.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the number of shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
b.
To calculate: The effect of a stock dividend of 10% on the capital account of Squash Delight.
Introduction:
Stock Dividend:
When a company pays dividends to its shareholders in the form of additional shares, it is termed as stock dividend. This is generally paid out when the company has less cash reserves.
c.
To explain: The more restrictive plan on future cash flows among the two on the basis of
Introduction:
Stock Dividend:
When a company pays dividends to its shareholders in the form of additional shares, it is termed as stock dividend. This is generally paid out when the company has less cash reserves.
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the number of shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
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EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
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