Question: Sammy's Sportshops has been very profitable in recent years and has seen its stock price steadily increase to over $100 per share. The CFO thinks the company should consider either a 100% stock dividend or a 2-for-1 stock split.
Required: 1. Complete the following chart comparing the effects of a 100% stock dividend versus a 2-for-1 stock split on the stockholders' equity accounts, shares outstanding, par value, and share price.
2. What is the primary reason companies declare a large stock dividend or a stock split?