Question

# Robotics Company initially has 15,000 shares of \$6 par value outstanding of common stock on January...

Robotics Company initially has 15,000 shares of \$6 par value outstanding of common stock on January 1, 2015. During the year, they have the following changes in terms of shares.

 Mar. 2015 3-for-5 reversed stock split Jun. 2017 25% stock dividend Oct. 2018 4-for-3 forwarded stock split Feb. 2019 Purchased 3,000 shares treasury stock

How many shares outstanding as of now? How about par value per share?

(Rounded to the nearest dollar, if necessary.)

Reverse stock Split: In reverse stock split the stock is reduced with increase in value of shares

Forward stock Split : In Forward stock split, the number of shares is increased while the value of the shares decrease.

Treasury Stock; Treasury stock is the buy back of shares issued by the company.

Calculation of Outstanding Shares

Given, opening bal of shares on On Jan 1 - 15,000

march 3 - Reverse stock split 3 for 5 - 15,000 * (3/5) = 9,000

Jun 2017 - 25% stock dividends = 9,000 *25% = 2,250

Oct 2018 - Forward split 4 for 3 = (9,000+2,250 *(4/3) = 15,000

Feb 2019 - Treasury stock = 3,000

Total Outstanding shares = 15,000 - 3,000 = 12,000

calculation of Value per share

Value per share = (15,000 * \$6) / 12,000

= \$90,000 / 12,000

Value per share = \$7.5

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