The key difference is that a stock split increases the number of shares outstanding while a reverse stock split reduces the number of shares outstanding.
For both events, there is no impact to retained earnings or overall stockholders’ equity.
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What is a reverse stock split?
A reverse stock split is when the number of shares outstanding is reduced. The only aspects that are impacted are the number of shares outstanding and the par value per share. As you can see in the visual below, there is no impact to retained earnings and no impact on overall stockholders’ equity.
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What is a stock split?
A stock split will increase the number of shares outstanding that a company has and will divide the par value by its split amount. Stock splits will not require a journal entry, but they will require a unique method of computation. The visual below illustrates the calculation to make to the number of outstanding shares....
What is a reverse stock split?
A reverse stock split is when the number of shares outstanding is reduced. The only aspects that are impacted are the number of shares outstanding and the par value per share. As you can see in the visual below, there is no impact to retained earnings and no impact on overall stockholders’ equity.
What is a stock split?
A stock split will increase the number of shares outstanding that a company has and will divide the par value by its split amount. Stock splits will not require a journal entry, but they will require a unique method of computation. The visual below illustrates the calculation to make to the number of outstanding shares....
