Ibram Corporation had 200,000 shares of $1 par value common stock outstanding. If Ibram announces a 4-for-1 stock split, the par value and number of shares outstanding after the stock split would be:

Question

Jazlyn Wolf

Business

21 April, 00:54

Ibram Corporation had 200,000 shares of $1 par value common stock outstanding. If Ibram announces a 4-for-1 stock split, the par value and number of shares outstanding after the stock split would be:

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Pierce Durham · Answer 1

Post split Shares: 800,000

Post split par value: $0.25

Explanation:

Stock split seeks to increase the number of shares available for trading on the exchange thus increasing the liquidity. Stock split of 4 for 1 increases the shares by 4 times e. g. every holder of 1 share will receive total of 4 new shares. Thus the shares will increase to 4 times: (200,000 * 4) = 800,000.

Post split share price is calculated by dividing par value to the proposed split.

($1 / 4) = $0.25 per share.