A stock dividend of one share of stock per five shares owned has been declared by Company X. Earnings per share will decrease by 20% following the stock dividend.
The stock dividend paid by Firm X is one share of stock for every five shares owned.
Therefore,
A rise in the number of shares
= [ 1 ÷ 5 ] × 100%
= 20%
As a result, the earnings per share will drop by 20%, or by the amount that the number of shares has increased.
Hence, Decline 20%
A stock is a type of instrument that denotes the holder's ownership stake in the issuing company and is typically traded on stock markets. In order to raise money to run their businesses, corporations issue stock. The two primary stock categories are common and preferred.
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