Question

Nico Inc., which had 60,000 shares of common stock outstanding, declared a 4-for-1 stock split. a. What will be the number of shares outstanding after the split?

Answer 1

Nico Inc.

The number of shares outstanding after the split is:

240,000 shares.

Step-by-step explanation:

a) Data and Calculations:

Outstanding common stock = 60,000 shares

4-for-1 stock split = 60,000 * 4

= 240,000 shares

b) In this instance, Nico Inc.'s stock after the 4-for-1 split will result in every shareholder now having four times the number of shares. This implies that the total number of outstanding shares in Nico Inc. will quadruple. But, the stock split doesn't make Nico's investors more money immediately, as it also splits the share price. However, after the split, the sentiments of Nico's investors may shore up the share price, depending on some underlying performances indices.