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Corporations declare forward and reverse stock splits for very different reasons. When the price of a stock increases to the point where the price makes it too high for many retail investors to purchase a round lot ( typically 100 shares) corporations will often declare a forward stock split. The impact of the forward stock split reduces the market price of the stock making it more attractive to individual investors. For example, let's assume XYZ is tracking in the market at $100 per share and the company declares a 2 for 1 split. As a result of the split XYZ will now be priced at $50 per share. Making it more attractive to individual investors. An investor who owned 100 shares of XYZ before the split value at $100 per share would now own 200 shares of XYZ valued at $50 each. The value of their holdings would not change. Their ownership would be valued at $10,000 before and after the split. To calculate the ownership take the number of shares and multiply it by the split as a fraction 2/1 and you multiply the share price by the reciprocal of the split as a fraction ½. If they are going to test you on an uneven split it will probably be a 3:2 split. Reverse splits on the other hand are effected to increase the price of a stock to make the stock more attractive to institutional investors. Many institutions do not want to purchase shares of stock trading below $5 or $10 per share. In these cases the reverse stock split reduces the number of shares and increases the market price of the stock For example, If ABC was trading in the market at $4 per share and ABC declared a 1 for 10 reverse split ABC would now be trading in the market at $40 per share. An investor who owned 1,000 shares at $4 per share before the split would now own 100 shares at $40 each. The value of the investor’s holdings remained unchained. Their ownership is $4,000 before and after the split.