## How Adjusted Closing Price Works

The adjusted closing price and closing price are what companies use to calculate stock prices. The closing price is the same as the raw price, the cash worth of the last transacted price before the close of the market. You can also factor anything that could affect the stock price after the market closes into the adjusted closing price.

The supply and demand of market players usually influence the price of a stock. Dividends, stock splits, and rights offerings, for example, all affect a stock's price. You can use adjustments to get a more accurate idea of the stock's results. If you are an investor, you should know how corporate decisions affect a company's closing price.

The adjusted closing price is particularly useful when looking at historical returns since it gives you a clear picture of the company's equity value. There are several examples of adjustments that can affect the closing price.

## Example of Adjusted Closing Price

To make an adjusted closing price clear, here is an example of an adjusted closing price after a stock split. Your company's stock is priced at \$500 per share, and your company has a 2:1 stock split. The number of shares will double due to the corporate action, but each unique share will be valued at \$250. In this situation, the closing price would have to be adjusted to reflect the stock price more accurately after a stock split.

Another example would be that the closing price of your shoe company at the end of the day is \$600. Following that, your corporation pays a \$20 dividend per share. Since the corporate activity would impact the closing price, your company will determine a modified closing. In this scenario, the estimate would be \$600 – \$20, which would give you a \$580 adjusted closing price.

## Adjusted Closing Price vs. Closing Price

Calculating the worth of your stocks might be more difficult than simply looking at their price on a given day. A "closing price" and an "adjusted closing price" exist for all stocks. These prices indicate two different approaches to calculating the worth of your stock. The closing price of your stock is just its cash value at the end of the day, but its adjusted closing price represents your stock's closing price in relation to other stock features.

The adjusted closing price of your stock is a more technically accurate portrayal of the stock's underlying value. The cash value of a stock at the end of the day is the closing price, whereas the adjusted closing price takes into account dividends, stock splits, and new stock offerings. The adjusted closing price indicates the change in your stock value due to the firm's new share offerings. When a company offers more stock shares, you can consider those shares as a new offering, and companies usually do this to raise funds.