1. What Is A Reverse Stock Split?

A reverse stock split is a corporate action where a company reduces the number of its outstanding shares by combining multiple shares into one. This increases the share price proportionally while maintaining the same market capitalization.

2. How Does The Calculator Work?

The calculator uses the reverse stock split formula:

Where:

• \( \text{new\_shares} \) — Number of shares after reverse split
• \( \text{old\_shares} \) — Number of shares before reverse split
• \( \text{ratio} \) — Reverse split ratio (e.g., 1:10 ratio means 10 old shares become 1 new share)

Explanation: The formula calculates how many shares an investor will hold after a reverse stock split based on their original holdings and the split ratio.

3. Importance Of Reverse Stock Split Calculation

Details: Understanding reverse stock splits is important for investors to accurately track their holdings, calculate their investment value, and understand corporate actions that affect share structure.

4. Using The Calculator

Tips: Enter the number of shares you currently own and the reverse split ratio. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why do companies perform reverse stock splits?
A: Companies typically perform reverse splits to increase their share price, meet stock exchange listing requirements, or appear more attractive to institutional investors.

Q2: Does a reverse stock split affect my investment value?
A: No, the total value of your investment remains the same immediately after a reverse split, though the number of shares decreases and the price per share increases proportionally.

Q3: How are fractional shares handled in reverse splits?
A: Most companies cash out fractional shares rather than issuing partial shares, paying shareholders the cash value of any fractional shares.

Q4: What's the difference between a stock split and reverse stock split?
A: A regular stock split increases the number of shares and decreases the price, while a reverse split decreases the number of shares and increases the price.

Q5: Do I need to take any action during a reverse stock split?
A: Typically no action is required from shareholders. The broker and company handle the conversion automatically.