What is Reverse Split

 

Reverse split: - Reverse split decreases the total number of shares of a company. Due to reverse split total number of shares decreases, par value of shares is increased but market capitalization will remain same and EPS of the company will increase as the no of share outstanding decrease.

For example consider a company which has 1,00,000 shares outstanding with a par value of BDT 10, now it decides to make a reverse split of 1 for 2. So the new number of shares outstanding will be 50,000 and par value will be increased to BDT 20.

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What is Stock Split

Stock Split – Stock split increases the total number of shares of a company. Due to stock split total number of shares increase, par value of shares is reduced but market capitalization will remain same and EPS of the company also reduced as the no of share outstanding increase.

For example consider a company which has 1,00,000 shares outstanding with a par value of BDT 10, now it decides to make a stock split of 2 for 1. So the new number of shares outstanding will be 2,00,000 and par value will be reduced to BDT 5.

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