Split
This query is : Resolved
19 August 2010
A compnay has declared 16:1 split..Is it a reverse or forward split...Whts the net effect of shares and Earnings Per share.
Thanks
Thanks
20 August 2010
hi
Normlly company goes for split , whenever the STOCK PRICES are very high and not available for nomal investors
FORWARD SPLIT
Giving extra shares to holding one
eg:
if you hold 100 shares of company and each worth Rs 200
then total worht is 100*200=RS20000
(compay wants to split the shares due to high value and voltality)
spilt (forward)16:1
then total worth is 1600*12.5=RS20000
That means your Worth will not change
2)EPS=INCOME AVAILABLE FOR INVESTORS/OUSTANDING SHRARES
since denominator increased in FORWARD split the EPS will decrease
Normlly company goes for split , whenever the STOCK PRICES are very high and not available for nomal investors
FORWARD SPLIT
Giving extra shares to holding one
eg:
if you hold 100 shares of company and each worth Rs 200
then total worht is 100*200=RS20000
(compay wants to split the shares due to high value and voltality)
spilt (forward)16:1
then total worth is 1600*12.5=RS20000
That means your Worth will not change
2)EPS=INCOME AVAILABLE FOR INVESTORS/OUSTANDING SHRARES
since denominator increased in FORWARD split the EPS will decrease
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