How to Calculate Stock Split

A stock split or stock divide increases the number of shares but reducing the total value of each share. To calculate stock splits, you will need to determine the rations like 2-1, 2-3, 2-4, etc.

Learn how to calculate a stock split with the following examples:

(1) If you owned 60 shares worth $10 per share prior to the split, and later the company decided to execute a 2-for-1 stock split, then:
After the split, the number of shares = 60 * 2 = 120 shares
The new price per share = $10 / 2 = $5

Note: Your stocks overall value remains the same (see below):
Before the split =: 60 * $10 = $600
After the split = 120 * $5 = $600

(2) ABC Company announces a 3-for-1 stock split, which means that you will own three shares for every 1 share previously owned. If you owned 10,000 shares at $15 each pre-split, you would now own 30,000 shares at $5 post-split (see below):
Before = 10,000 * $15 = $150,000 (market value)
After = 30,000 * $5 = $150,000

* Next: Advantages of Stock Splits

Author

Kelvin Wong Loke Yuen is an experienced writer with a strong background in finance, specializing in the creation of informative and engaging content on topics such as investment strategies, financial ratio analysis, and more. With years of experience in both financial writing and education, Kelvin is adept at translating complex financial concepts into clear, accessible language for a wide range of audiences. Follow him on: LinkedIn.

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