1. What is Split Ratio?

The split ratio represents how many new shares a shareholder receives for each old share they own during a stock split. It's a key metric in corporate actions that affect share structure.

2. How Does the Calculator Work?

The calculator uses the split ratio formula:

Where:

• \( \text{New Shares} \) — Number of shares after the split
• \( \text{Old Shares} \) — Number of shares before the split

Explanation: The ratio shows the proportional change in share count. Common splits include 2:1 (2-for-1) or 3:2 (3-for-2).

3. Importance of Split Ratio

Details: Understanding the split ratio helps investors evaluate how a stock split affects their position size, share price, and market capitalization.

4. Using the Calculator

Tips: Enter the number of new shares and old shares as whole numbers. Both values must be positive numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does a 2:1 split ratio mean?
A: It means for every 1 share you own, you'll receive 2 shares after the split (each share worth half the original price).

Q2: Does a split ratio affect the total value of my investment?
A: No, the total value remains the same - you just own more shares at a proportionally lower price per share.

Q3: What's the difference between forward and reverse splits?
A: Forward splits increase share count (ratio >1), reverse splits decrease share count (ratio <1) to adjust share price.

Q4: How do I interpret a 5:4 split ratio?
A: You receive 5 new shares for every 4 old shares you own (1.25:1 ratio).

Q5: Why do companies perform stock splits?
A: Mainly to make shares more affordable to small investors and increase liquidity, though the fundamental value doesn't change.