Question

Edie's Health Supply has 125,000 shares of stock outstanding with a par value of $1 per share and a market value of $5 a share. The company has retained earnings of $76,500 and capital in excess of par of $340,000. The company just announced a 1-for-5 reverse stock split. What will be the par value per share after the split

Answer 1

The Par value per share after the split will be 2,500 shares.

What is a Share?

• Shares are fractional ownership interests in a corporation. For some businesses, shares are a type of financial instrument that allows for the equitable distribution of any declared residual profits in the form of dividends.
• A stock with no dividend payments does not distribute its income to its shareholders. Instead, they look forward to further stock price growth as business profits rise.
• Shares are an organization's equity capital, and there are two primary kinds of shares: common shares and preferred shares.
• As a result, the terms "shares" and "stock" are frequently used synonymously. Owners of a corporation have the option of issuing preferred shares or common stock to investors.

A single common share's par value is determined by the charter of a corporation. It usually has nothing to do with the shares' actual worth. Actually, it's frequently lower. The par value is stated on each stock certificate that is issued for shares that are bought.

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