Split

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Split

Sometimes companies split their outstanding shares into more shares. If a company with 1 million shares executes a two-for-one split, the company would have 2 million shares. An investor with 100 shares before the split would hold 200 shares after the split. The investor's percentage of equity in the company remains the same, and the share price of the stock owned is one-half the price of the stock on the day prior to the split.

Split

The act of a publicly-traded company increasing the number of outstanding shares, while maintaining the same market capitalization. In other words, a company engages in a stock split in order to decrease its share price by increasing the number of shares available. Current holders of the stock are given more shares so that they maintain the same percentage of ownership in the company. For example, a company with a share price of $400 may double the number of shares so that the share price drops to $200. Companies conduct stock splits for a number of reasons; one possible reason is to keep its shares affordable. See also: Last Split, Split Ratio, Split Adjusted.

split

A proportionate increase in the number of shares of outstanding stock without a corresponding increase in assets or in funds available, as would be the case in a new stock offering or in an acquisition that uses stock as payment. Essentially, a firm splits its stock to reduce the market price and make the shares attractive to a larger pool of investors, although it is questionable if the firm's stockholders actually benefit from a split because share prices are reduced proportionately with the increase in shares outstanding. A 4-for-1 split would result in an owner of 100 shares receiving 300 additional shares, or an after-split total of 4 shares for every 1 share owned before the split. Also called split up, stock split. Compare reverse stock split.
Case Study In April 1996, directors of the Coca-Cola Company approved a 2-for-1 split, the firm's fourth stock split in a decade. The announcement stated that trading in the split shares would begin on May 13, approximately a month after the split was announced. Shares of the firm's common stock fell by $1.25 with the announcement. Shareholders of Coca-Cola could expect that the stock price would decrease by half when the securities commenced trading on a post-split basis. A stock split results in additional shares of ownership without a corresponding change in total income or assets. All per-share financial statistics decline in proportion to the size of the split. Thus, a 2-for-1 split results in twice the outstanding shares, each with half the book value and half the earnings as prior to the split. In general, stock splits create more paper but not more value for shareholders, because the market value of the stock can be expected to fall in proportion to the size of the split. A stock trading at $60 per share just prior to a 4-for-1 split should trade at approximately $15 per share following the split. Academic research investigating how or when investors can profitably invest in stock split situations offers mixed results. Some research indicates that trading stock just prior to a split may create unusual profit opportunities. One well-known study finds that unusual returns can be earned in the days before and after the announcement, but not on the date of the actual split. Other research indicates investors will earn unusually low returns by investing in stock in the year or two following a split. This variability of results means the individual investors cannot expect to earn unusual profits by purchasing a stock just prior to or following a split. By the time a split occurs, any unusual profit opportunity has already passed.
References in periodicals archive ?
A selection of finger sandwiches, homemade scones, cakes and shortbread biscuits, a choice of fair trade coffees, freshly brewed teas and herbal infusions.
Now roll out to about 2cm thick and, using a cookie cutter, cut out the scones, kneading the remaining dough together to cut out more.
Dickens 2, Southfield Road, Middlesbrough You can enjoy a 'Tea with a Twist' here, featuring a teapot or cocktail, a selection of sandwiches, scones, and sweet treats.
The findings show that scone rhymes with cone in parts of the Midlands and Yorkshire, as well as the Irish Republic.
Enjoy mixed finger sandwiches, scones with strawberry preserve and clotted cream, a selection of cakes, tea breads and savouries, washed down with a glass of champagne.
Dr Oliver O'Grady, the archaeologist who has been leading the excavations at Scone for the past five years, said: "The radiocarbon dates confirm Moot Hill as one of Europe's extraordinary survivals, unique in Britain and the first assembly-mound in Scotland to be scientifically dated.
There is speculation that the Stone of Scone, which now sits in Edinburgh Castle in Scotland, is not the original one.
Whole grains aren't just catching on in breads, but in muffins, scones, and other baked goods, too.
Scone's Fallen Anzacs commemorates one hundred and four men from the Scone District of New South Wales who died during World War I.
According to "The Highways and Byways of Central Scotland," a book written by Seton Gordon in 1886, for centuries Scotland crowned its monarchs at the Abbey of Scone, a few miles upriver from Perth.
DEAD AS A SCONE is a delightful and warm tale written in the Agatha Christie "cozy" style.