stock split
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Answer / satishkandukuri
A stock split or stock divide increases the number of shares
in a public company. The price is adjusted such that the
before and after market capitalization of the company remains
the same
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Answer / vinay kumar darsi
stock split means dividing one share into parts.this is done just to increase number of stock.at the same time price also divided but there is no change in mkt capitalization
For example, assume that XYZ Corp. has 20 million shares outstanding and the shares are trading at $100, which would give it a $2 billion market capitalization. The company’s board of directors decides to split the stock 2-for-1. Right after the split takes effect, the number of shares outstanding would double to 40 million, while the share price would be $50, leaving the market cap unchanged at $2 billion.
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Answer / naveen
Stock split means increasing or decreasing the share price of company without effecting the market capitalizing.We have two types of stock split forward and reversal stock split
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Answer / anand swarup
stock split is corporate action. stock split means dividing one share in two parts.increase the outstanding shares decrease the market value and par value with out any changes in market capitalization.
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Answer / bhupender janmejai
A stock split is where a publicly traded company increases the number of shares available to be purchased. A stock split does not alter the market capitalization of the company, so the stock price must be adjusted accordingly.
As a stock split lowers the stock price, it would ultimately make the stock more attractive to a wider group of investors. Prior to a split a stock may not have been affordable for many, whereas after, it may be.
A stock split is often seen a positive sign that a company is growing and is likely to continue to grow. As a result a company's stock price often increases after a split.
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DHPL is a small sized firm manufacturing hand tools. It manufacturing plan is situated in haryana. The company's sales in the year ending on 31st march 2007 were Rs.1000 million(Rs.100 crore) on an asset base of Rs.650 million. The net profit of the company was Rs.76 million. The management of the company wants to improve profitability further. The required rate of the company is 14 percent.The company is currently considering an investment proposal. One is to expand its manufacturing capacity. The estimated cost of the new equipment is Rs.250 million. It is expected to have an economic life of 10 years. The accountant forecasts that net cash inflows would be Rs.45 million per annum for the first three years, Rs.68 million per annum from year four to year eight and for the remaining two years Rs.30 million per annum. The plant can be sold for Rs.200 million: (a) The company can borrow funds from a nationalized bank at the interest rate of 14 percent for 10 years. It will be required to pay equal annum installment of interest and repayment of principal. (b) A financial institution has offered to lend money to DHPL at 13.5 per annum but it needs to pay equated quarterly installment of interest and repayment of principal. Questions: (1) Should the company expand its capacity? show the computation of NPV. (2) What is the annual installment of bank loan? (3) calculate the quarterly installment of the financial institution loan. (4) should the company borrow from the bank of from the financial institution?
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