(Solution) - The board of Wicker Home Health Care Inc is exploring -(2025 Original AI-Free Solution)

Paper Details

The board of Wicker Home Health Care, Inc., is exploring ways to expand the number of shares outstanding in an effort to reduce the market price per share to a level that the firm considers more appealing to investors. The options under consideration are a 20% stock dividend and, alternatively, a 5-for-4 stock split. At the present time, the firm?s equity account and other per-share information are as follows:

a. Show the effect on the equity accounts and per-share data of a 20% stock dividend.
b. Show the effect on the equity accounts and per-share data of a 5-for-4 stock split.
c. Which option will accomplish Wicker?s goal of reducing the current stock price while maintaining a stable level of retained earnings?
d. What legal constraints might encourage the firm to choose a stock split over a stockdividend?