Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

How does Yahoo finance adjust stock data for splits and dividends?
Should be noted that pacoverflow's answer is wrong. Yahoo back-adjusts all the previous (not current or future) values based on a cumulative adjustment factor. So if there's a dividend ex-date on December 19, Yahoo adjusts all the PREVIOUS (December 18 and prior) prices with a factor which is: 1 - dividend / Dec18Close