CAN YOU PLEASE EXPLAIN SHARE SPLITTING AND CONSOLIDATION? - ProProfs Discuss
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Can you please explain share splitting and consolidation?



Asked by Howie, Last updated: Oct 01, 2021

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John Smith

John Smith

John Smith
John Smith

Answered Sep 08, 2016

Splitting a share means you are splitting one share (like an axe through a tree stump)into several shares. so if you split a $75 share with a ratio of 3:1, you end up withthree shares worth $25 a piece.a consolidation means you are combining multiple shares into one (like gathering thestumps and making them into a tree). if the shares are currently worth $75 a piece andits a 3:1 consolidation or reverse split, you would end up with less shares in the marketand each new share would be worth $225 ($75 x 3).dont look at the ratio number to try and figure out what to do on these types ofquestions. you need to focus first on whether it is a split or reverse split (i.e.,consolidation). once you know that, it doesnt matter how the ratio is stated (i.e., itcould state 3:1 or 1:3 and the result will still be the same).if its a split, the 1 in the ratio is split into 3 (in this case). if it is a consolidation, the 3 inthe ratio are consolidated into 1 (in this case).
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