Re: Re: Capital Increase
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Posted by Mark on June 05, 1999 at 09:40:01:
In Reply to: Re: Re: Capital Increase posted by George on June 05, 1999 at 00:23:16:
: : : Hello,
: : : My name is George and I'm trying F.M. in Greece.
: : : I have this problem. : : : For example I have 100 shares at June 3.
: : : (Closing price 100$).
: : : The company decides for a capital increase
: : : for old shear holders and gives 1 new shares
: : : for every 5 old at 30$ each beginning at June 4th. : : : Is this the correct way?
: : : Reinvested Distribution at June 4th: 20 * 30 = 600$.
: : : New Shares: 120 : : : So far so good. But the old price
: : : (June 3 and going back)
: : : is not adjusted as it does with a split. : : : It should be changed to something like this:
: : : round ( ( 100 + 30/5 )* 5/6 ) = 88 : : : I am doing something wrong or what? : : : Thanks
: : : George : : Hi George,
: : The way you record this depends on how
: : the shares are distributed. If it was a taxable
: : distribution that you then took the money, and
: : repurchased the 20 shares, then you would do it
: : as you have done. This method increases your
: : tax cost basis. : : On the other hand, if it
: : was a split, you would record it as a split,
: : keeping your cost basis constant. You can
: : record a "6 for 5" split. : : Thanks,
: : Mark
: : -- : Thanks Mark for your reply : The split could be an answer, but it doesn't work
: by it self.
: I also have to pay for the new shares. : In the other hand a similar problem is
: with dividends.
: A dividend of 3$ per share (going in my pocket),
: for example, should decrease historical
: share prices by 3$.
: This is NOT a multiplication and a split
: could not implement it. : By the way shouldn't the program insert
: transactions into the default cash account
: when importing transactions from a text file? : Keep up the good work
: George Hi George,
Okay, I misunderstood, I didn't realize you
had to pay for this 6th share. What is the
closing share price after this? Were you buying
this 6th share at a reduced price, or had the
share price gone down to $30? Did you have to
pay for this 6th share out of your pocket, or
was it with a declared distribution on the
previously owned 5 shares? If it was the first,
then this would just be a purchase. If it was
the latter, then it would be a reinvested
distribution. Dividends do not decrease previous historical
prices. You can view the "Price + Dist." graph,
which is intended to show the true performance
of your investment by adding the per share
distribution value(s) to the share price. Yes, that would be a good option to add. Thanks,
Mark
--
Mark Beiley
Fund Manager for Windows 3.1x/95/98/NT
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