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Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

What the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declare s 100% stock dividend or a two-for-one split? Assume that either action is feasible.

Summary Introduction

To explain: The difference between a stock dividend and stock split and what is preferable 100% stock dividend or a two for one stock split.

Introduction:

Stock Dividend:

When the dividend payment is made by issuing the additional shares rather than the cash payout than the payment is known as a stock dividend or scrip dividend. The company prefers to do this during the low supply of liquid cash.

Explanation
  • In stock split firm increases the number of shares, while reducing the par or stated value per share. On the other hand, in the case of stock dividend the retained earnings will be transferred to capital stock...

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