What does adjusted close mean

The adjusted closing price shows the stock's value after posting a dividend. If the price of individual shares in a corporation is too high for investors to purchase in round numbers, the corporation may "split" its stock into shares. If the company increases the number of shares, the value of each individual share drops because each individual share now represents a smaller percentage. The adjustment reflects the stock split, rather than a single-day 50 percent drop in the share price.

Similar to splitting stocks, a corporation may choose to offer additional shares of stock. New shares are usually issued in order to raise capital for the corporation. The company may issue new shares of stock in a rights offering, in which the current shareholders are given the option to purchase the new shares at reduced prices. New offerings are when a corporation may choose to offer additional shares of stock, which is often done to raise additional money.

These new offerings may be offered as a rights offering, where current shareholders have the first right to purchase the shares at reduced prices or the shares may be offered to the public. New offerings decrease the value of existing stock because when there are more individual shares, each share represents a smaller amount of the total value. The adjusted closing price accounts for the new offerings and the resulting devaluation of each individual stock, and not merely the cash value of the stock at the end of the day.

When individual stocks become very expensive, companies can split the stocks into smaller units. These splits, like new offerings, reduce the overall value of each share because the number of total shares increases. While the initial overall value of each individual stock decreases with a stock split, the overall value of the company can actually increase because new investors snatch up the newly reduced stocks and drive the price up. Adjusted closing price accounts for stock splits, both because of a decrease in value caused by the split itself, and also the subsequent possible increase in value due to the new demand.

Dividends are payouts that a company can distribute to shareholders when stocks and profits are appreciating. A company might pay out a dividend as an award of additional shares to a stockholder or as a cash return. You need to have JavaScript enabled to use this page. To enable JavaScript, follow these instructions. Yahoo questions? Sign up here. What is the adjusted close?

Multipliers Split multipliers are determined by the split ratio. For example: In a 2 for 1 split, the pre-split data is multiplied by 0.