To determine the outstanding shares, you must deduct the number of repurchased or retired shares from the total number of shares issued by the company. Companies issue non-voting shares to raise finance while preserving voting power in a small group of shareholders, usually the founders or management team. Deferred shares (founder shares) are usually given to important people within the issuing company.

How to Calculate Outstanding Shares

Common stock outstanding refers to the total number of common shares issued and outstanding by a company. In this article, we will provide a step-by-step guide on how to calculate common stock outstanding. Calculating common stock outstanding is a straightforward process that requires identifying the total number of shares authorized, issued, and outstanding.

How to find the Total Number of Outstanding Shares of the Company?

Outstanding shares represent a company’s shares that are held by investors, whether they’re individual, institutional, or insiders. Investors can find the total number of outstanding shares a company has on its balance sheet. Outstanding shares can also be used to calculate some key financial metrics, including a company’s market cap and its earnings per share. They are separate from treasury shares, which are held by the company itself. Common stock outstanding is the total number of common shares issued by a company and held by its shareholders.

Deferred Shares

You can find the total number of outstanding shares of a company by checking the company’s financial statements, which are easily accessible on the company’s website. Outstanding shares are the total quantity of shares of a company’s stock issued and owned by institutional investors, individual investors, and insiders. Investors and analysts use outstanding shares to calculate financial ratios such as earnings per share (EPS) and price-to-earnings (P/E). Outstanding shares estimate other financial metrics, such as book value per share. Book value per share is the minimum number of shares owned in a company and is used bookkeeping to forecast the possible market price of a share at a specific time.

• However, due to the fluctuations in share counts between reporting periods, the figure is typically expressed as a weighted average.
• As noted above, outstanding shares are used to determine very important financial metrics for public companies.
• Market capitalization, or market cap, is calculated by multiplying the number of outstanding shares by the share’s current market price.
• Explore how corporations authorize and calculate issued shares through market cap and balance sheet methods.
• They are separate from treasury shares, which are held by the company itself.
• There are also considerations to a company’s outstanding shares if they’re blue chips.

How to Calculate the Weighted Average of Outstanding Shares

There is a relationship between authorized and outstanding shares, although they represent different characteristics of a company’s stock. The number of outstanding shares can never surpass the maximum number of authorized shares. A company cannot issue further shares without modifying its articles of formation if it reaches its approved share limit. A company issues outstanding shares when it decides to raise funds by selling ownership in the company to investors.

Thus, from the above details, we can understand the various valuation of common stock. Strike offers a free trial along with a subscription to help traders and investors make better decisions in the stock market. Preferred shares take priority over common shares, in terms of asset distributions in the event of law firm chart of accounts bankruptcy. At the time, GE discussed plans to split into three companies and to divest from many businesses. They determined that reducing their share count from nearly 8.8 billion to roughly 1.1 billion better aligned with this vision (1).

Dividing the number of shares to be purchased by shares outstanding formula the number of shares outstanding reveals the percentage of ownership that the investor will have in the business after the shares have been purchased. Knowing a company’s number of shares outstanding is key when calculating critical financial metrics and determining share value as a portion of ownership. Weighted average shares outstanding is the process of weighting every number of common stock to reflect how much time they were in effect. Below is the procedure for calculating common stock outstanding from a balance sheet. By calculating a company’s weighted average number of outstanding shares, we can get a more accurate picture of its earnings. P/B is often used to value companies in the financial sector (i.e. banks) and is calculated by taking a company’s share price and dividing it by the book value per share.

It is also known as the float, and it represents the total number of shares that are available for trading on the open market. Common stock outstanding is an important metric because it helps investors and analysts understand the company’s capital structure, its ability to pay dividends, and its potential for growth. The number of shares of common stock outstanding is a metric that tells us how many shares of a company are currently owned by investors. This can often be found in a company’s financial statements, but is not always readily available — rather, you may see terms like “issued shares” and “treasury shares” instead. Besides, it can be helpful to understand where the numbers you’re looking at came from.