Should a stock split change price-earnings ratio for wilson

Reference no: EM131792512

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?

Reference no: EM131792512

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