The Bonus Shares Ratio Calculator is a tool that helps shareholders calculate the number of bonus shares they will receive from a company issuing bonus shares. It also determines the adjusted total number of shares held by the shareholder after the bonus issue and the change in the shareholding ratio. Companies often issue bonus shares as a way to reward existing shareholders, increasing the number of shares held without any additional cost. However, the overall value of the shareholder’s investment remains the same because the market price of each share adjusts proportionally.
This calculator simplifies the process of calculating how many additional shares a shareholder will receive and how this impacts their overall shareholding. It is particularly useful for investors who need to understand the exact number of shares they will hold after the bonus issue, as well as for tracking changes in their portfolio.
Formula of Bonus Shares Ratio Calculator
To calculate the number of bonus shares received, the total shares after the bonus issue, and the adjusted shareholding ratio, the Bonus Shares Ratio Calculator uses the following formulas:
- Bonus Shares Ratio (BSR) = Number of Bonus Shares Issued (NBS) ÷ Number of Existing Shares Held (ESH)
- Total Shares After Bonus (TSA) = Number of Existing Shares Held (ESH) + Number of Bonus Shares Issued (NBS)
- Adjusted Shareholding Ratio (ASR) = Total Shares After Bonus (TSA) ÷ Number of Existing Shares Held (ESH)
Variables:
- BSR: Bonus Shares Ratio, which represents the ratio of bonus shares issued to existing shares.
- NBS: Number of Bonus Shares, the number of additional shares issued by the company to the shareholder.
- ESH: Number of Existing Shares Held, the number of shares the shareholder holds before the bonus issue.
- TSA: Total Shares After Bonus, the total number of shares the shareholder will hold after the bonus issue.
- ASR: Adjusted Shareholding Ratio, the ratio of the total number of shares after the bonus issue to the number of shares held before.
Key Points:
- The bonus shares ratio helps investors understand how many bonus shares they will receive for each existing share they own.
- The total shares after the bonus issue provide insight into the overall number of shares a shareholder holds post-bonus.
- The adjusted shareholding ratio helps track changes in the investor’s shareholding structure following the bonus issue.
Common Terms and Bonus Shares Ratio Table
Here’s a table outlining some common terms and values related to bonus shares and how the ratio affects the number of shares received:
| Term | Definition |
|---|---|
| Bonus Share Ratio (BSR) | The ratio of bonus shares issued for each existing share, such as 1:2 (one bonus share for every two shares). |
| Ex-Bonus Date | The date on which the stock begins trading without the bonus share entitlement. |
| Share Price Adjustment | The proportional reduction in share price after the bonus issue to maintain the company’s market capitalization. |
| Record Date | The cutoff date set by the company to determine which shareholders are eligible for the bonus shares. |
This table provides a quick overview of important terms investors should understand when dealing with bonus shares.
Example of Bonus Shares Ratio Calculator
Let’s walk through an example to demonstrate how the Bonus Shares Ratio Calculator works.
Suppose a shareholder owns 200 shares (ESH) of a company that announces a bonus issue in the ratio of 1:2, meaning one bonus share will be issued for every two shares held. Here’s how the calculator works:
- Number of Existing Shares Held (ESH) = 200 shares
- Bonus Share Ratio (BSR) = 1:2 (for every two shares held, one bonus share is issued)
Step 1: Calculate the Number of Bonus Shares Issued
The bonus shares ratio is 1:2, meaning for every two shares, one bonus share is issued. To calculate the number of bonus shares the shareholder will receive:
Number of Bonus Shares (NBS) = ESH × Bonus Share Ratio
NBS = 200 × (1 ÷ 2) = 100 bonus shares
The shareholder will receive 100 bonus shares.
Step 2: Calculate the Total Shares After Bonus
Total Shares After Bonus (TSA) = Number of Existing Shares Held (ESH) + Number of Bonus Shares Issued (NBS)
TSA = 200 + 100 = 300 shares
After the bonus issue, the shareholder will hold a total of 300 shares.
Step 3: Calculate the Adjusted Shareholding Ratio
Adjusted Shareholding Ratio (ASR) = Total Shares After Bonus (TSA) ÷ Number of Existing Shares Held (ESH)
ASR = 300 ÷ 200 = 1.5
The adjusted shareholding ratio is 1.5, meaning the shareholder now holds 1.5 times the number of shares they initially held before the bonus issue.
Most Common FAQs
1. Why do companies issue bonus shares?
Companies issue bonus shares as a way to reward existing shareholders without distributing cash. This helps increase the liquidity of the stock, making it more affordable for investors, while maintaining the same overall market capitalization. Bonus shares also signal a company’s strong financial health, boosting investor confidence.
2. How does the bonus share ratio affect the number of shares I own?
The bonus share ratio determines how many additional shares you will receive for each existing share you hold. For example, if the bonus ratio is 1:2, you will receive one bonus share for every two shares you own, increasing your total number of shares without changing your overall investment value.
3. Does the value of my shares change after a bonus issue?
The value of individual shares typically decreases after a bonus issue, but the total value of your investment remains the same. For example, if the share price was $100 before the bonus issue, and the bonus shares double your holdings, the share price will adjust downward proportionally to maintain the company’s market capitalization.