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Glossary Term: SPLIT

Definition(s) for SPLIT:


1. ) this occurs when a company increases the number of shares it has outstanding. In a two-for-one split, each share is split into two. The investor's percentage of equity in the company remains the same. For instance, if an individual has 100 shares valued at $50 each, he/she would have 200 shares valued at $25 each after the split. Companies often split their stock when the price gets too high. There are also reverse splits, when companies decrease the number of shares outstanding.

2. ) The division of the outstanding shares of a corporation into either a larger or smaller number of shares, without any immediate impact in individual shareholder equity. For example, a 3-for-1 forward split by a company with 1 million shares outstanding results in 3 million shares outstanding. Each holder of 100 shares before the split would have 300 shares worth less, although the proportionate equity in the company would stay the same. A reverse split would reduce the number of shares outstanding and each share would be worth more.


See Also:
REVERSE SPLIT, STOCK SPLIT, STOCK SPLIT, STOCK SPLIT


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