Why adjusted close price

Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. When trading is done for the day on a stock exchange, all stocks are priced at close.

The price that is quoted at the end of the trading day is the price of the last lot of stock that was traded for the day. This is referred to as the stock's closing price. That closing price is the reference point used by investors to compare a stock's performance over a period of time. It's worth noting that closing prices do not reflect after-hours prices or any corporate actions that might alter the stock's price from time to time, although they act as useful markers for investors to assess changes in value over time.

Good or bad news related to a company, its industry, or the economy overall can affect the price of any stock during the day.

Less often but equally important, any distribution that is made by the company to shareholders will also affect the stock price. These distributions may include cash dividends, stock dividends, or stock splits.

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. In a 4 for 1 split, the pre-split data is multiplied by 0. In a 1 for 5 reverse split, the pre-split data is multiplied by 5. Was this article helpful? Yes No. Please tell us why you didn't find this helpful. In general, the adjusted closing price is considered to be a more technically accurate reflection of the true value of the stock.

The closing price of a stock is only its cash value at day's end, whereas the adjusted closing price factors in things like dividends, stock splits and new stock offerings.

The adjusted closing price analyzes the stock's dividends, stock splits and new stock offerings to determine an adjusted value. The adjusted closing price reflects the change in stock value caused by new offerings from the corporation. 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.