The National Directory of Certified Public Accountants

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What Is A Stock Split ?

A Stock Split is a division of outstanding shares of a corporation into a stated number of shares by which each outstanding share entitles its owner to a fixed number of new shares. In a reverse split, a stock owner receives less shares at a correspondingly higher price. In a forward split, a stock owner receives more shares at a correspondingly lower price. In both reverse and forward splits, the total equity number of shares multiplied by the stock price remains the same. An example of a two-for-one forward split, the owner of 200 shares, each worth $200, would be given 400 shares, each worth $100.

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