Assignment: DIVIDENDS

There are various types of dividends; however, the two most common dividends have to do with either a cash dividend or a stock dividend. With a cash dividend the shareholder receives cash, based on the number of shares that is owned. In a stock dividend the shareholder receives stock certificates, based on the number of shares owned. From the perspective of the stockholder, which dividend would do you think they would prefer and from the perspective of the company, which dividend do you think they would prefer. Please fully explain your answer, giving reasons as to why.

WIEBOLD, INCORPORATED

Discuss Case 2 (Wiebold, Incorporated). Answer the questions that are presented in the case.

Case 2: Wiebold, Inc.

The following note related to stockholders' equity was reported in Wiebold, Inc.'s annual report.

On February 1, the Board of Directors declared a 3-for-2 stock split, distributed on February 22 to shareholders of record on February 10. Accordingly, all numbers of common shares, except unissued shares and treasury shares, and all per share data have been restated to reflect this stock split.

On the basis of amounts declared and paid, the annualized quarterly dividends per share were $0.80 in the current year and $0.75 in the prior year.

Instructions

(a) What is the significance of the date of record and the date of distribution?

(b) Why might Wiebold have declared a 3-for-2 for stock split?

(c) What impact does Wiebold's stock split have on (1) total stockholders' equity, (2) total par value, (3) outstanding shares, and (4) book value per share?