APPLE is only one of the multiple companies that have approved and declared a stock split, the most recent one on a 4-for-1 basis last August 28, 2020. Analyze and explain:
(i) What is a stock split;
(ii) Why do you think that APPLE has approved this stock split decision;
(iii) How has that the stock split affected APPLE’s stocks’ value;
(iv) What is the APPLE’s current dividend payout ratio;
(v) How do you think that the APPLE’s dividend payout ratio may affect to the stocks’ value.
This exercise assesses the following learning outcomes:
(i) the evaluation of the dividend payout ratio,
(ii) the trade-off between paying dividends and retaining the profits within the company,
(iii) the purpose and procedure related to stock repurchases, and
(iv) the evaluation and advice on a firm going from private to a public company.