stock split Stock split is the process of

stock split • Stock split is the process of splitting shares with high face value into shares of a lower face value. • Face value - The face value is the fixed price of a share which is set by promoters and bankers while forming the company. • A stock split increases the number of shares in a public company. The price is adjusted such that the market capitalization of the company almost remains same.

Types of Stock splits Forward Reverse

FORWARD STOCK SPLITS • A stock market strategy. • Ratio can be 2 -for-1, 3 -for-2 or 4 -for-1. • Eg. 100 shares x $50 = $5, 000 before the split. 200 shares x $25 = $5, 000 after the split • The price of the stock however, the number of shares. • A company issues additional shares of stock • shareholders own more shares. • Liquidity of the stock

REVERSE STOCK SPLITS • • A negative investment strategy - a stock merge. A tactic to reduce the number of shareholders. Indication that a company is in financial trouble. Eg. 100 shares x $50 = $5, 000 before the split. 50 shares x $100 = $5, 000 after the split • The price of the stock however, the number of shares • "D" to the end of its name- Name change and consolidation

• Companies with low share prices uses for: 1. Gain more respectability in the market. 2. Prevent from being delisted, or even removed from the market indexes.

Stages • • • PRE-ANNOUNCEMENT DORMANCY PRE-SPLIT RUN THE SPLIT

Bonus issue: • A company gives free shares to its existing shareholders on a pro rata basis. • For instance, if a company declares a bonus of 2: 1, the investor gets two additional shares for each share he holds. • Does not mean that the company has raised additional capital. Stock split: • It is the division of a share into multiple shares. • Breaking the face value of share, the company tries to boost the liquidity of its shares. • investors have more shares after a stock split, their wealth remains unaffected.

Bonus issue Stock split Par value of share is unchanged The par value of share is reduce A part of reserves is capitalized There is no capitalized reserves

Britania industry Rs. 2118 424 424 424

Other companies which had opted for stock splits are…

CONCLUSION