How to split stock earnings?
If he asked you to invest his money with certain objectives which resulted in you buying specific stocks for him with his money, then sell all the stocks which you bought with his money and the capital and profits to him. You may want to calculate the trading fees that you incurred while buying these specific stocks and taxes from the sale of these stocks, withholding them to over the trading fees that you have already paid and the taxes that you might still need to pay. If you traded with his money no different than yours, then I would think of your investment account as a black box. Calculate the initial money that you both invested at the time you added his capital to the account, calculate how much it all is currently worth, then liquidate and return a percentage equal to that of his initial investment. You can account for trading fees and taxes, subtracting by the same percentage. Let's suppose your friend gave your $100 and you invested all of it (plus your own money, $500) into one stock. Therefore, the total investment becomes $100 + $500 = $600. After few months, when you want to sell the stock or give back the money to your friend, check the percentage of profit/loss. So, let's assume you get 10% return on total investment of $600.  Now, you have two choices. Either you exit the stock entirely, OR you just sell his portion. If you want to exit, sell everything and go home with $600 + 10% of 600 = $660. Out of $660, give you friend his initial capital + 10% of initial capital. Therefore, your friend will get $100 + 10% of $100 = $110. If you choose the later, to sell his portion, then you'll need to work everything opposite. Take his initial capital and add 10% of initial capital to it; which is $100 + 10% of $100 = $110. Sell the stocks that would be worth equivalent to that money and that's it. Similarly, you can apply the same logic if you broke his $100 into parts. Do the maths. If you have been a good steward of your friend's money this suggestion will not be too difficult. Pay your friend what his money would have earned in the S&P 500 if you had just invested it in an index fund. Subtract 15% for long-term capital gains. You can use the ticker SPY to see what the price was on the day he gave you the money, versus the price today. If you had helped your friend open an account for himself, you would have given him more than the returns on his money, you would have helped educate him on how to invest for himself.
Yes, one such strategy is dividend arbitrage using stock and in the money options. You have to find out which option is the most mispriced before the ex-dividend date. "(Value of shares+Dividends received)/(Initial investment) would be the typical formula though this is more of a percentage where 1 would indicate that you broke even, assuming no inflation to be factored. No, you don't have to estimate the share price based on revenues as I would question how well did anyone estimate what kind of revenues Facebook, Apple, or Google have had and will have. To estimate the value of shares, I'd likely consider what does my investment strategy use as metrics: Is it discounted cash flow, is it based on earnings, is it something else? There are many ways to determine what a stock ""should be worth"" that depending on what you want to believe there are more than a few ways one could go." You haven't seen one because you haven't looked for one properly. You can set a google alert for stock split and get information about major issues splitting their stocks quite regularly, as well as a daily dose of recommendations from people without a say in the matter for big companies to split their stock. Stock splits are announced in advance by company management. Scrip dividends are similar to stock splits. With a stock split, 100 shares can turn into 200 shares; with scrip dividends they might turn into 105 shares. Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%. In most jurisdictions, you want to split the transactions. Why? Because you want to report capital gains on your investment income, and this will almost always be taxed at a lower rate than employment income. See Wikipedia's article for more information about capital gains. In Canada, you pay tax on 50% of your realized capital gains. There are also ways to shelter your gains from tax; in Canada, TFSA, in the US, I believe these are 'roth' accounts. I actually think you have to split the transactions, at least in Canada and the U.S., though I'm not absolutely sure. Regardless, you want to do so if you plan on making money with your investments. If you plan on making a loss, please contact me as I'm happy to accept the money you are planning on throwing away. How are shareholders sure to receive a fair percentage of each company?  At the time the split occurs, each investor owns the same proportion of each new company that they owned in the first.  What the investor does with it after that (selling one, for example) is irrelevant from a fairness perspective. Suppose company A splits into companies B and C.  You own enough stock to have 1% of A.  It splits.  Now you have a bunch of shares of B and C.  How much?  Well, you have 1% of B and 1% of C.  What if all the profitable projects are in B?  Then shares of B will be worth more than those of C.  But it should be the case that the value of your shares of B plus the value of your shares of C are equal to the original value of your shares of A.  Completely fair.  In fact, if the split was economically justified, then B + C > A.  And the gains are realized proportionally by all equityholders. Remember, when a stock splits, every share splits so that everyone owns both companies in the same proportion as everyone else.  Executives don't determine what the prices of the resulting companies are...that is determined by the market.  A fair market will value the child companies such that together they are worth what the original was. For stock splits, let's say stock XYZ closed at 100 on February 5.  Then on February 6, it undergoes a 2-for-1 split and closes the day at 51.  In Yahoo's historical prices for XYZ, you will see that it closed at 51 on Feb 6, but all of the closing prices for the previous days will be divided by 2.  So for Feb 5, it will say the closing price was 50 instead of 100. For dividends, let's say stock ABC closed at 200 on December 18.  Then on December 19, the stock increases in price by $2 but it pays out a $1 dividend.  In Yahoo's historical prices for XYZ, you will see that it closed at 200 on Dec 18 and 201 on Dec 19.  Yahoo adjusts the closing price for Dec 19 to factor in the dividend. You should have a partnership agreement of some sort.  The reason partnership agreements exist is so nobody can change the game because of the outcome.   I'd say the most typical partnership agreement is that everyone gets an equal cut, meaning that everyone also makes an equal contribution.  If you have start up expenses of $10,000, you'd each contribute $5,000.  Separately, you can determine ownership share by contribution amounts, maybe one of you contributed $2,000 and the other $8,000; this would be an 80/20 split. The performance of the operation doesn't have anything to do with determining how to divide the pie, your partnership agreement determines that.  How much have you each contributed and what agreement did you make before you decided to be partners? If you have a poor performing business segment, then the partnership should get together and consider adjusting or stopping that line of business.  But you don't change how the pie is divided because of it; unless your partnership agreement says you do. Simple math. Take the sale proceeds (after trade expenses) and divide by cost. Subtract 1, and this is your return. For example, buy at 80, sell at 100, 100/80 = 1.25, your return is 25%. To annualize this return, multiply by 365 over the days you were in that stock. If the above stock were held for 3 months, you would have an annualized return of 100%.  There's an alternative way to annualize, in the same example above take the days invested and dive into 365, here you get 4. I suggested that 25% x 4 = 100%. Others will ask why I don't say 1.25^4 = 2.44 so the return is 144%/yr. (in other words, compound the return, 1.25x1.25x...) A single day trade, noon to noon the next day returning just 1%, would multiply to 365% over a year, ignoring the fact there are about 250 trading days. But 1.01^365 is 37.78 or a 3678% return. For long periods, the compounding makes sense of course, the 8%/yr I hope to see should double my money in 9 years, not 12, but taking the short term trades and compounding creates odd results of little value. "I think the ""right"" way to approach this is for your personal books and your business's books to be completely separate. You would need to really think of them as separate things, such that rather than being disappointed that there's no ""cross transactions"" between files, you think of it as ""In my personal account I invested in a new business like any other investment"" with a transfer from your personal account to a Stock or other investment account in your company, and ""This business received some additional capital"" which one handles with a transfer (probably from Equity) to its checking account or the like. Yes, you don't get the built-in checks that you entered the same dollar amount in each, but (1) you need to reconcile your books against reality anyway occasionally, so errors should get caught, and (2) the transactions really are separate things from each entity's perspective. The main way to ""hack it"" would be to have separate top-level placeholder accounts for the business's Equity, Income, Expenses, and Assets/Liabilities. That is, your top-level accounts would be ""Personal Equity"", ""Business Equity"", ""Personal Income"", ""Business Income"", and so on. You can combine Assets and Liabilities within a single top-level account if you want, which may help you with that ""outlook of my business value"" you're looking for. (In fact, in my personal books, I have in the ""Current Assets"" account both normal things like my Checking account, but also my credit cards, because once I spend the money on my credit card I want to think of the money as being gone, since it is. Obviously this isn't ""standard accounting"" in any way, but it works well for what I use it for.) You could also just have within each ""normal"" top-level placeholder account, a placeholder account for both ""Personal"" and ""My Business"", to at least have a consistent structure. Depending on how your business is getting taxed in your jurisdiction, this may even be closer to how your taxing authorities treat things (if, for instance, the business income all goes on your personal tax return, but on a separate form). Regardless of how you set up the accounts, you can then create reports and filter them to include just that set of business accounts. I can see how just looking at the account list and transaction registers can be useful for many things, but the reporting does let you look at everything you need and handles much better when you want to look through a filter to just part of your financial picture. Once you set up the reporting (and you can report on lists of account balances, as well as transaction lists, and lots of other things), you can save them as Custom Reports, and then open them up whenever you want. You can even just leave a report tab (or several) open, and switch to it (refreshing it if needed) just like you might switch to the main Account List tab. I suspect once you got it set up and tried it for a while you'd find it quite satisfactory." Thanks for your thorough reply.   Basically, I found a case study in one of my old finance workbooks from school and am trying to complete it.   So it's not entirely complicated in the sense of a full LBO or merger model.   That being said, the information that they provide is Year 1 EBITDA for TargetCo and BuyerCo and a Pro-Forma EBITDA for the consolidated company @ Year 1 and Year 4 (expected IPO). I was able to get the Pre-Money and Post-Money values and the Liquidation values (year 4 IPO), as well as the number of shares.   I can use EBITDA to get EPS (ebitda/share in this case) for both consolidated and stand-alone @ Year 1, but can only get EPS for consolidated for all other years. Given the information provided. One of the questions I have is do I do anything with my liquidation values for an accretion/dilution analysis or is it all EPS? It's really boring and you should automate it. Most front office guys worth their salt have built something that will normally calculate what they should have in their portfolios.  Basically we own X units of stock K, stock K pays dividend D on date M, you check on date M that we have received X*D for all K's.  When trades are made you also need to verify that the dollar amounts are correct, for equity its usually automatic but for fixed income and OTC products you can build a tool to check it. "A Bloomberg terminal connected to Excel provides the value correcting splits, dividends, etc. Problem is it cost around $25,000. Another one which is free and I think that takes care of corporate action is ""quandl.com"". See an example here." Your dividend should show up in one of a few methods: (1) Cash in your trading account (2) A check mailed to you (3) A deposit to a linked bank account (4) As additional new shares in the stock, as the result of a DRIP setup.