Adjusted Closing Prices

TL;DR

This paper explains how to compute adjusted closing prices from raw closing prices and distributions, emphasizing spreadsheet methods, to accurately measure security growth over time.

Contribution

It introduces a method to calculate adjusted closing prices from closing price data and distributions, with practical spreadsheet implementation guidance.

Findings

Adjusted closing prices can be derived from raw data.

Growth of security is the ratio of adjusted closing prices.

Method facilitates accurate return calculations.

Abstract

Historical returns depend on historical closing prices and distributions. We describe how to compute adjusted closing prices from closing price/distribution data with an emphasis on spreadsheet implementation. Then the growth of a security from one date to another (1 + total return) is just the ratio of the corresponding adjusted closing prices.