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What impact does stock split have on - Total stockholder's equity, Total par value, Outstanding shares...

What impact does stock split have on - Total stockholder's equity, Total par value, Outstanding shares and Book value per share

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Answer #1

Before understanding Effects of stock split let's just know what is stock split.

When companies decide to divide 1 stock into 2 or more , say a stock of $10 converted into 4 stock of$2.5 or 2 stock of $5.

Effects of stock split--

On total stockholders's equity- total equity endings same. Net balance in stock holder's equity does not change in stock split.

On total par vakue- Par value per share decreases but total PAR value remains same.

Outstanding shares and book value per share--- outstanding shares increase by stock split and book value per share decreases.

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