The number of outstanding shares is also important in calculating other financial metrics such as earnings per share. For instance, stock buybacks may increase the value of the remaining shares of stock and improve metrics such as earnings per share because there are fewer shares outstanding. A company’s number of shares outstanding is used to calculate many widely used financial metrics. Market capitalization — share price times number of shares outstanding — and EPS are both computed using a company’s number of outstanding shares. When a company executes a stock split, the number of outstanding shares rises.

• Yes, the number of outstanding shares of a company can be found in SEC (Securities and Exchange Commission) filings such as 10-K annual reports and 10-Q quarterly reports.
• Should they do so, however, they would also contribute $50 million in cash to the corporate treasury.
• On the other hand, Treasury Shares are repurchased by the company and retained in its own treasury.
• As a result, it decreases the number of outstanding stocks in the public and increases the amount of treasury shares.
• The term outstanding shares refers to a company’s stock currently held by all its shareholders.
• The number of outstanding shares can never surpass the maximum number of authorized shares.

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.

Example of shares outstanding

Warrants are instruments that give the holder a right to purchase more outstanding stock from the company’s treasury. Whenever warrants are activated, stocks outstanding increase while the number of treasury stocks decreases. If all these warrants are activated, XYZ overpayment of benefits will have to sell 100 shares from its treasury to the warrant holders. Deferred shares (founder shares) are usually given to important people within the issuing company. Deferred shares usually gives them less power to vote and a lower priority for dividend payments than common shares or preferred shares.

What Are the 11 Stock Market Sectors?

Market cap is the total value of all the company’s outstanding stock, or the total number of outstanding shares times the current stock price. Investors use market cap to categorize companies into large-cap, mid-cap and small-cap companies, which can help guide investors looking to diversify their investments. Outstanding shares provide insights into a company’s size, ownership structure, and market capitalization. The number of outstanding shares affects several key financial metrics and ratios, including earnings per share (EPS) and price-to-earnings (P/E) ratio. As noted above, outstanding shares are used to determine very important financial metrics for public companies. These include a company’s market capitalization, such as market capitalization, earnings per share (EPS), and cash flow per share (CFPS).

Many companies offer stock options and warrants in addition to the stocks they issue to investors and executives. These are instruments that give the holder a right to purchase more stock from the company’s treasury. The float and shares outstanding increase and the number of treasury stocks decreases every time one of these instruments is activated. Shares outstanding is the total number of shares a company has released to the public and its insiders, including employees, executives and founders. To determine the number of shares outstanding, you subtract the amount of treasury shares from the authorized shares.

Is a lot of shares outstanding good or bad?

A higher number of outstanding stocks means a more stable company given greater price stability as it takes many more shares traded to create a significant movement in the stock price. Contrary to this, the stock with a much lower number of outstanding stocks could be more vulnerable to price manipulation, requiring much fewer shares to be traded up or down to move the stock price. Non-voting shares, also known as preferred shares, typically offer a fixed dividend payout and no voting rights in company matters. For example, Berkshire Hathaway’s Class B shares are non-voting and offer lower voting rights than their Class A shares. Preferred shares can be a smart investment for those searching for a consistent income source and are ready to accept lower potential profits in exchange for lower volatility. They are not appropriate for investors seeking strong growth potential or a say in company decisions.

Investors often track changes in outstanding shares as part of their broader analysis when making investment decisions. Understanding the dynamics of outstanding shares is integral to comprehending a company’s financial health and market position. Outstanding shares and float stock are both key indicators used to evaluate a company’s stock, but they represent distinct accounting scandals aspects of the company’s ownership structure. Stock repurchases (stock buybacks) occur when a company purchases its shares from the market. This lowers the number of outstanding shares as the company purchases a portion of its stock.

Stock Splits

A company considers the total amount of shares it has authorized to issue and has issued to shareholders, including both outstanding and treasury shares, as issued shares. Companies include authorized but unissued shares that have not yet been offered to investors in the number of issued shares. Basic outstanding shares refer to the total number of issued and outstanding shares of a company’s equity. Outstanding shares are the total quantity of shares of a company’s stock issued and owned by institutional investors, individual investors, and insiders. Public reports in which companies list the total outstanding shares include a quarterly or annual report or a balance sheet. As you look through a company’s financial documents, don’t confuse outstanding shares with issued shares, which is a slightly different category and includes treasury stock.

Reverse Stock Split

A reverse stock split may suggest that a company is experiencing financial difficulties and seeks to prevent delisting or negative investor perception. Conversely, outstanding stocks will decrease if a firm completes a share buyback or a reverse stock split (consolidating a corporation’s shares according to a predetermined ratio). As a result, it decreases the number of outstanding stocks in the public and increases the amount of treasury shares. Outstanding shares play a crucial role in determining a company’s market capitalization, a key metric for investors assessing a firm’s overall value. The market cap is calculated by multiplying the current market price per share by the total number of outstanding shares.

• A company considers the total amount of shares it has authorized to issue and has issued to shareholders, including both outstanding and treasury shares, as issued shares.
• Lockups aside, long-standing investors such as founders or venture capital backers may have their own restrictions on selling, or may have signaled that they have no intent to do so.
• In a nutshell, the term “outstanding shares” refers to the total amount of shares that are owned by all of the company’s stockholders.
• On the other hand, floating shares refer to the number of shares available for trading in the public market.
• You can find outstanding shares in the company’s most recent annual report found on Form 10-K or on quarterly 10-Q filings.

Overall, the number of shares outstanding, the metrics you can calculate from it, and related metrics — like the float — provide key insights to investors. Knowing a company’s number of shares outstanding is key when calculating critical financial metrics and determining share value as a portion of ownership. Shares outstanding is a financial number that represents all the shares of a company’s stock that shareholders, including investors and employees, currently own. Assume that Company A has 100 million shares outstanding and a trading price of $10. It also has 10 million stock options outstanding with an exercise price of $5. For most companies, the number of authorized shares well exceeds the shares outstanding.

The weighted average of outstanding shares is a method employed to calculate the average number of shares outstanding within a certain period. This calculation is frequently employed in financial analysis to determine various financial ratios, like earnings per share (EPS) and price-to-earnings (P/E) ratio. You must follow these five steps to determine the Outstanding Shares Weighted Average. Outstanding shares are a significant aspect of calculating the market capitalization of a company. Market capitalization, or market cap, is calculated by multiplying the number of outstanding shares by the share’s current market price. Outstanding shares can refer to both types of shares, common and preferred, as they don’t represent a specific type of share but rather the total number of shares held by investors.

Financial Websites and Databases

For example, shares may come with or without the power to vote on board appointees and other corporate matters. Depending upon the class of share, a shareholder may or may not have the right to receive dividend payments or participate in capital distribution upon dissolution of the company. This video explains several types of stocks and how they are presented in a balance sheet, including shares outstanding. The basic count is the current total number of shares; voting in the general shareholders’ meeting and dividend distribution are calculated using this number. Other companies may explicitly list their outstanding shares as a line item in the equity section of their balance sheet.

The reason for that is that most public companies have instruments that provide for shares to be issued in the future. These instruments include stock options, stock warrants, and convertible debt. But the concept of outstanding shares is a bit more complicated than it seems. The number of shares outstanding changes over time, sometimes dramatically, which can impact the calculation for a reporting period. At any given point, instruments like warrants and stock options must be accounted for as well. This number represents all the shares that can be bought and sold by the public as well as all the restricted shares that require special permission before being transacted.

For example, a company can have 20 million shares outstanding issued to all its shareholders. Shares outstanding are the number of shares that a company has issued and are owned by its shareholders. Although outstanding shares are useful for investors and analysts, they should also consider other factors when evaluating a company’s stock. You can check the stock exchange where the company’s stock is listed for information about its shares outstanding. Most stock exchanges have this information available on their websites or platforms.

Stock splits are often initiated to lower the share price, making it more accessible to retail investors and enhancing market liquidity. For example, in a 2-for-1 stock split, the share price is halved, but the outstanding shares double, improving affordability and attracting a broader investor base. The profit and loss statements in nearly every corporate earnings press release will include both basic and diluted shares outstanding. For example, if a company issues stock to employees further to the exercise of stock tax withholding estimator options, the total shares outstanding will increase. The total number of outstanding shares allows you to calculate the corporation’s total market capitalization representing the company’s total market value.