'Reverse stock split' is generally an indication of financial difficulty. Elucidate.

A reverse stock split or reverse split is a process by which shares of corporate stock are effectively merged to form a smaller number of proportionally more valuable shares. Under the situation of falling price of company's share, the company may want to reduce the number of outstanding shares to prop up the market price per share. The reduction of the number of outstanding shares by increasing per share par value is known as reverse split. For example, a company has 20 lakh outstanding shares of ₹5 par value per share. Suppose it declares a reverse split of one for four. After the split it will have 5 lakh shares of ₹20 par value per share. The Reverse split is sometimes used to stop the market price per share below a certain level. The reverse split is generally an indication of financial difficulty and is therefore intended to increase the market price per share.