What Is Stock Split? Bonus Shares? (#50)

 

Today we are gonna cover the following topics in this Article....
What Is Stock Split? Explained With An Example!
Why Do Companies Split Up Their Share Prices? Explained With The Same Example!
What Are Bonus Shares? Explained With The Same Example!

What Is Stock Split? Exaplained With An Example!
Stock Split is nothing but splitting of the stock/share price. Spilliting up the stock price does not affect the Company's Market Capitalization Or any other factor of the Comapny except for the Company's Share Price Or The Number Of Outstanding Shares In Example

For example-- lets say theres a Company names ABC & is worth $100,000 & have 10,000 shares each of 10$ currnetly issued in the Market.
Now lets say that after 6 months the Company's Share Price is of 20$.... hence the Company's worth 200,000$ now....
But we know that the Company still have only 10,000 shares in the Market....
But the Company's director OR CEO says that they wanna split up the share price in half.... so hence now again each share is gonna worth of 10$ (half of 20$) & the Company'll now have 20,000 shares in the Market but still the value OR Market Cap. of the Company is still 200,000$.

All the Stock Splitting Affects Is Just The Share Price & The Number Of Outstanding Shares In Public.

Now, if this just doesn't impacts the Company in any real major form than why do relaly Company's's do so.....

Lets Find Out....

Now lets talk 'bout why do Compannis do that.... What Do You Think could be the possible reason of a Company doing so.... can you think of any reason.... let me know. Just, LEAVE A COMMENT!

Here, lets talk about....
Why Do Companies Split Up Their Share Prices? With The Same Example!
It is because many Companies tend to keep their share prices lower for in the reach of the majority of people...
Now for the example I just took.... 20$.... it may not be that high, right.... hmmmm its just an example, though; just to keep things simple for y'all.... I took a small number on purpose for the calculations to be easy, you know....
But in reality Companies tend to split up their Stock Prices only when they think the prices have gone a little too high....
So they split it up & one more thing to mention is that they don't always split up Stock Prices only into half.... they may split it up to like 10 halves.... if they really want to....
For example to split a share of 1000$ to 100$.... we will get 10 shares.... means we are splitting it up in 10 halves.
I hope it makes sense!

So, now lets talk 'bout
What Are Bonus Shares? Explained With The Same Example!
Lets just continue with the example we took in the very beginning.... so if I own 1 share of the Company ABC.... which is of 20$ & if the Company splits it up into half than I'll have 2 sharls of the Company ABC, now.... so it'll be fine to call one of the Shares as a BONUS SHARE.... however we still own a whole of a 20$ of the Share of/in that Company.
So Bonus Shares really do have something to do with the Stock Splitting.... in fact Bonus Shares Exist due to Stock Splitting.... if that makes sense!



Anyways, so I hope you understood what really meant to make you understand!
That was all for now....
&
Thanks For Reading!