Tiger Training Inc.has decided on a 4-for-1 REVERSE stock split.If the firm currently has 1,600,000 shares outstanding,how many shares will be outstanding after the stock split?

Question

Quizplus · Accepted Answer

In a reverse stock split, the number of outstanding shares are reduced and the share price increases proportionally. In this case, the 4-for-1 reverse stock split means that for every 4 shares currently outstanding, there will be only 1 share after the split. Therefore, the number of outstanding shares after the split will be 1,600,000/4 = 400,000 shares.