What Is Adjusted Closing Price and How to Calculate It?

3 min read | Updated on December 02, 2025, 16:53 IST

If you have ever looked at stock charts or historical share prices, you have probably seen something called the ‘adjusted closing price.’ At first glance, it looks very similar to the normal closing price, so it’s natural to wonder why analysts, investors and even most financial websites put so much emphasis on the adjusted version instead.

However, once you understand what the adjusted closing price actually is, you will find it’s one of the most useful numbers as it gives a true picture of a share’s past performance.

Let’s understand it in simple terms.

What Is the Adjusted Closing Price?

The adjusted closing price is the share price at the end of the trading day, but with one important twist, it’s been modified to account for any corporate actions that occurred during the trading day.

The corporate actions could be,
Dividends (especially cash dividends)
Stock splits
Reverse stock splits
Rights issues

Special dividends or distributions

Why Do Corporate Actions Matter?

Above mentioned events affect the parent company’s valuation and, in turn, the value of each share. If you looked at only the unadjusted closing price, you might think a share price dropped drastically one morning. But in reality, it was simply due to a dividend payout or a stock split.

Open FREE Demat Account within minutes!

Join now

In short, the adjusted closing price gives you a fair, apples-to-apples comparison of price movements over time.

Why Is Adjusted Closing Price Important?

Here are the main reasons investors rely on it

It shows the true return on investment

Let's take a realistic scenario, a company has paid a healthy dividend. The share price dipped by roughly the same amount on the next trading day (also called the ex-dividend date). If you looked only at the normal closing price, you might assume the stock fell for negative reasons.

But with the adjusted closing price, there is no drop because the dividend is added back in. Hence, you get a clearer view of the stock’s actual performance.

It smooths out distortions from stock splits

If a company does a 2-for-1 split, the share price halves. That doesn’t mean the business suddenly dropped by half in value. The adjusted closing price corrects this, so historical prices remain comparable.

It helps with better charting and analysis

Most long-term charts use adjusted closing prices because they tell the real story. Without adjustments, price charts can look haywire with a series of random drops.

It gives more accurate performance comparisons

If you are analysing returns over five or ten years, adjusted prices ensure every event is factored in. This allows you to compare companies appropriately.

How to Calculate Adjusted Closing Price?

Well, you usually don’t need to calculate it yourself. Most financial websites and trading platforms do it automatically.

But knowing how it works helps you understand what you are looking at. The calculation depends on the event being adjusted.

Adjustment for Cash Dividends

If a company pays a dividend, the share price normally falls by the dividend amount. To adjust for this, you add the dividend back:

Adjustment for Stock Splits

For a stock split, you adjust the price by the split ratio. Adjusted Closing Price = Closing Price ÷ Split Ratio

Example

A 2-for-1 split on a ₹600 closing price Adjusted price = ₹600 ÷ 2 = ₹ 300

What This Means

Before the split, 1 share cost ₹600.
After the split, you now hold 2 shares, each priced at ₹300.
Your total investment value remains ₹600 (₹300 × 2 shares).

Adjustment for Special Dividends or Other Corporate Actions

Special dividends are treated similarly to normal dividends but often have a bigger impact. Other actions, such as rights issues, require more complex calculations, but the principle is always the same, that is, keep price history consistent.

To many, the adjusted closing price may sound like a technical term, but it simply reflects the share's actual price by removing the filters of corporate actions. It factors in dividends, splits and other corporate actions so you can focus on what really matters, how the stock has actually performed.

Adjusted closing price gives you a cleaner, more accurate view of a company’s share price journey.

About Author

Pradnya Surana

Sub-Editor

is an engineering and management graduate with 12 years of experience in India’s leading banks. With a natural flair for writing and a passion for all things finance, she reinvented herself as a financial writer. Her work reflects her ability to view the industry from both sides of the table, the financial service provider and the consumer. Experience in fast paced consumer facing roles adds depth, clarity and relevance to her writing.