Investors can find a company’s number of outstanding shares reported on its financial statements. Some investors perceive companies with a low level of floating stock as more volatile because there are fewer shares that trade on the market, and a catalyst can quickly drive the price up or down. Generally, share buybacks increase the value of the stocks that remain outstanding because they represent a more significant stake in the business conducting the buyback. It also improves metrics such as earnings per share because fewer shares are outstanding. Publicly traded firms list the number of shares outstanding on their balance sheets. Companies must provide regular reports of their balance sheet to investors as well as federal regulators like the Securities Exchange Commission (SEC).

The basic number of shares outstanding is simply the current number of shares available on the secondary market. On the other hand, the fully diluted shares outstanding calculation takes into account diluting securities such as convertibles (warrants, options, preferred shares, etc.). The number of shares outstanding increases with the issue of new shares and stock split, while it decreases with share re-purchase and reverses split. While outstanding shares are a determinant of a stock’s liquidity, the latter is largely dependent on its share float. A company may have 100 million shares outstanding, but if 95 million of these shares are held by insiders and institutions, the float of only five million may constrain the stock’s liquidity.

For example, if all of the 400 shares of stock that I issued in the last example were bought by the public, I would have 400 shares of stock outstanding. Outstanding shares are all current shares being held by the private or public. This includes restricted shares held by company employees or shares that are part of a large fund like a mutual fund. For example, when shares outstanding are going up, the ownership stake of shareholders is diluted. And when shares are bought back, investors end up owning more of the company.

Authorized and Issued Stock

A company generally embarks on a reverse split or share consolidation to bring its share price into the minimum range necessary to satisfy exchange listing requirements. While the lower number of outstanding shares often hampers liquidity, it could also deter short sellers since it becomes more difficult to borrow shares for short sales. As discussed, floating stock is the total number of shares available for public investors to buy and sell. Sometimes the figure is expressed as an absolute figure (ex. 5 million shares) or as a percentage of the firm’s total outstanding shares. Issued shares are the total amount of stock of a corporation that has ever been traded in the stock market. This includes all publicly traded shares, restricted shares, and any treasury shares that had been bought back by a company.

Shareholders own parts of a company through shares, which give them voting rights regarding company decisions. The percentage of the company owned by a shareholder determines the level of control a single shareholder has. The greater the percentage of shares owned, the greater control the shareholder has on company decisions.

• This includes all publicly traded shares, restricted shares, and any treasury shares that had been bought back by a company.
• Outstanding shares represent the number of a company’s shares that are traded on the secondary market and, therefore, are available to investors.
• Shareholders own parts of a company through shares, which give them voting rights regarding company decisions.
• Outstanding shares include all of a company’s shares held by shareholders as well as all the restricted shares owned by company insiders.
• These companies aggressively fund their growth by using convertible debt and paying employees with stock incentives.

Floating shares are the shares that are held by common investors and not by company officers or other institutional investors. The shares available to investors on the open market are commonly called the float. In general, stocks with low floats will experience more volatility than those with large floats. The float is the portion of outstanding shares that’s most relevant for smaller investors. The shares companies issue are known as authorized shares, which are the maximum number of shares they are lawfully permitted to make available to investors.

Are the Outstanding Shares Equal to the Float?

Our goal is to deliver the most understandable and comprehensive explanations of financial topics using simple writing complemented by helpful graphics and animation videos. We follow strict ethical journalism practices, which includes presenting unbiased information and citing reliable, attributed resources. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. For the denominator to be consistent with the numerator, it should reflect the earning power resulting from the issuances of new shares or the retirement of old shares. SUP is a complete startup formation toolkit, including your own legal portal, automated document generation, our proprietary cap tables, and SUP Academy, our exclusive online learning curriculum.

If you are analyzing a company’s stock, it is important to take into consideration the outstanding shares. For instance, the stock price reflects how investors assess the present worth of future earnings per share. Therefore, the more shares that are outstanding, the more the profit is split. Outstanding shares represent the number of a company’s shares that are traded on the secondary market and, therefore, are available to investors. A company’s outstanding shares may change over time because of several reasons.

How Stock Buybacks and Issuances Impact Shares Outstanding

The number of outstanding shares can be found on a company’s most recent quarterly or annual filing with the Securities and Exchange Commission (SEC), usually on its balance sheet in the shareholders’ equity section. As a potential investor, it is important to understand the meaning and functionality of outstanding shares as they can affect various financial parameters and also show the company’s liquidity. Please don’t confuse shares outstanding with authorized stock and issued stock as they are completely different, and shares outstanding is a subset of both authorized stock and issued stock. Floating stock is a narrower way of analyzing a company’s stock by shares. It excludes closely held shares, which are stock shares held by company insiders or controlling investors.

• Another factor that causes the outstanding stocks of a company to fluctuate is the stock split.
• Once you locate the line item for preferred stock, take note of the total number of preferred shares outstanding.
• A multinational company (aka a multinational corporation) is one that has business operations in more than one country.
• We will say that the company has 800 outstanding shares and 200 treasury shares.

Shares outstanding is the total number of shares that a business’s shareholders own, including shares owned by institutional investors but excluding shares owned by the company. If a company decides to buy back some of that stock, which then becomes treasury How to calculate shares outstanding stock, then the number of shares of stock outstanding will decrease. So, say I sold all 400 shares but then I realized that I needed to buy 50 shares back because I am hiring a new CEO and I promised her more stock than I have available to give her.

Shares Outstanding Vs. Treasury Shares

The more outstanding shares there are, the smaller the fraction of ownership that each share represents. A stock split occurs when a company increases its shares outstanding without changing its market cap or value. The next step is to find the treasury stock line item on the company’s balance sheet. This refers to how many total shares the company has purchased back from investors.

For example, let’s say you want to calculate the weighted average number of outstanding shares for a company over two reporting periods of 6 months each. In the first 6-month reporting period, the company has 100,000 shares outstanding. In the second 6-month period, the company’s number of shares outstanding is 150,000.

It’s used to calculate financial metrics

These balance sheets are found within a firm’s quarterly and annual reports. In addition, the figure is also listed in the capital section of a firm’s annual report (the Form 10-K filing). Knowing the number of shares a firm has outstanding is significant for a couple of reasons.

The formula for determining the outstanding shares is the number of shares outstanding x current share price. These shares are reported on the balance sheet and are important for the calculation of a firm’s market capitalization, earnings per share, dividend distribution, and voting rights. To calculate the number of outstanding shares, we need to know the issued shares, the repurchased shares (treasury shares), and the shares that the managing partners take (restricted shares).

That means that a shareholder would have to own nearly 43 million shares to own a 1% stake in Tota-Tola. The company could increase the number of shares it has outstanding by issuing more stock or splitting its existing shares. It could reduce its count of shares outstanding by starting a share buyback program. The rise of household financial technology has widely democratized stock market investing. Anyone can find a plethora of financial details using various websites or apps.

Since the number of outstanding shares is increasing, the liquidity of the stock increase too. However, although the total number of such shares is increasing, the total dollar value of these shares remains constant because a stock split doesn’t change the value of a company. In this article, we will define and discuss how to calculate shares outstanding. Shares outstanding are all the shares of a corporation authorized, issued ,purchased by and held by investors. On the other hand, share buybacks or reverse stock splits would decrease the outstanding share count.

Many stock analysts prefer to use an adjusted measure of outstanding shares that includes the number of potential new common shares that could result from convertible securities. The diluted share count considers all the shares that would be available if all the possible conversions took place. As already stated, investors can find the number of outstanding shares on the investor relations section of the company’s website or on its balance sheet within the “Capital Stock” or “Shareholders’ Equity” section. The stock exchange the company trades on will also report the number of outstanding shares. The number of shares outstanding is also significant to know because a firm could choose to issue more stock if it has authorized more shares than it currently has outstanding. If the company decides to sell additional authorized shares, it can reduce the value of the existing shares.