Renaissance Ventures Ltd announced issue of bonus shares in the ratio of 1:4 (1 share for every 4 shares held). At present the shares have a market value of ₹1000 per share. Besides the bonus issue, company also announce

Case (i) In case bonus shares were issued before splitting the face value Particulars Amount (₹) Market value of 4 shares required to be held by the shareholder = 4 x 1000 4000 Add: Value of 1 bonus share 0 Total market value of 5 shares 4000 No. of shares post- split of face value (10 share split to ₹2) 5 x 5 25 shares Average price per share 4000/25 160 Case (ii) if stock split happens before bonus issue Particulars Amount ₹ Market value of shares required to be held by shareholder- 4 x 1000 4000 Number of shares post- split 4 x 5 20 Number of bonus shares to be received 20/4 5 Total shares after bonus issue 25 Value of 25 shares 4000 Average price per share 4000/25 160 Conclusion - There is no change in the value of shares, whether the bonus issue happens before or after the split of face value.