Question: Wilson Pharmaceuticals' stock has done very well in the market during the last three years. It has risen from $45 to $70 per share. The firm's current statement of stockholders' equity is as follows:
a. What changes would occur in the statement of stockholders' equity after a two-for-one stock split?
b. What changes would occur in the statement of stockholders' equity after a three-for-one stock split? c. Assume that Wilson earned $14 million. What would be its earnings per share before and after the two-for-one stock split? After the three-for-one stock split?
d. What would be the price per share after the two-for-one stock split? After the three-for-one stock split? (Assume that the price-earnings ratio of 20 stays the same.)
e. Should a stock split change the price-earnings ratio for Wilson?