What effect will a two-for-one stock split have on the following items found on a firm's financial statements?

a) Earnings per share $4.20
b) Total equity $10,000,000
c) Long-term debt $4,300,000
d) Additional paid-in capital $1,534,000
e) Number of shares outstanding 1,000,000
f) Earnings $4,200,000

1 answer

a) Earnings per share: The earnings per share will be halved after the stock split. So, it will be $2.10.

b) Total equity: The total equity will remain the same after the stock split. It will still be $10,000,000.

c) Long-term debt: The long-term debt will remain the same after the stock split. It will still be $4,300,000.

d) Additional paid-in capital: The additional paid-in capital will remain the same after the stock split. It will still be $1,534,000.

e) Number of shares outstanding: The number of shares outstanding will double after the stock split. It will become 2,000,000.

f) Earnings: The earnings will remain the same after the stock split. It will still be $4,200,000.