outstanding shares of common stock

Outstanding shares include share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders. A company’s number of outstanding shares is not static and may fluctuate wildly over time. This section provides the sum of the total authorized shares, the total number of shares outstanding, and the total floating shares. Outstanding shares represent a company’s shares that are held by investors, whether they’re individual, institutional, or insiders.

These stockholders typically include officers, directors, and company-sponsored foundations. Companies may provide executives with stock options that can be converted to shares. However, these stock benefits are not included in the tally of shares outstanding until shares are fully issued.

outstanding shares of common stock

A company may announce a stock split to increase the affordability of its shares and grow the number of investors. For instance, a 2-for-1 stock split reduces the price of the stock by 50%, but also increases the number of shares outstanding by 2x. You can find outstanding shares in the company’s most recent annual report found on Form 10-K or on quarterly 10-Q filings.

Access Exclusive Templates

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). In addition to listing outstanding shares or capital stock on the company’s balance sheet, publicly traded companies are obligated to report the what are the rules for debits and credits in accounting number issued along with their outstanding shares. These figures are generally packaged within the investor relations sections of their websites, or on local stock exchange websites. The number of outstanding shares of a company changes constantly and is used to calculate its market capitalization. This is done by multiplying the total shares outstanding by the current price per share.

  1. Common stock outstanding is defined as the shares of common stock that have been issued minus any shares of common stock known as treasury stock.
  2. These include a company’s market capitalization, such as market capitalization, earnings per share (EPS), and cash flow per share (CFPS).
  3. A company’s outstanding shares may change over time because of several reasons.
  4. “Expert verified” means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity.
  5. 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.

Companies typically issue shares when they raise capital through equity financing or when they exercise employee stock options (ESOs) or other financial instruments. Outstanding shares decrease if the company buys back its shares under a share repurchase program. A company’s number of issued shares includes any shares the company has bought back and now holds in its treasury. The term “float” refers to the number of shares available to be traded by the public and excludes any shares held by company executives or the company’s treasury. Outstanding shares are an important aspect of stock market trading as they have a direct impact on the company’s market capitalization and shareholder equity.

Weighted Average of Outstanding Shares

Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories, except where prohibited by law for our mortgage, home equity and other home lending products. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. The term outstanding shares refers to a company’s stock currently held by all its shareholders.

outstanding shares of common stock

The number of shares outstanding decreases if the company buys back shares or a reverse stock split is completed. Before their availability on the secondary market, shares are authorized, issued, and, finally, purchased by investors who became equity owners or shareholders of the issuing company. Shareholders of common stock typically possess the right to participate in annual shareholders meetings and contribute toward the election of the company’s board of directors. Investors can look at any number of metrics to make their investment decisions. When it comes to stocks, a company’s outstanding and floating shares can provide some very important information about the organization.

Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts. However, due to the fluctuations in share counts between reporting periods, the figure is typically expressed as a weighted average. Shares https://www.online-accounting.net/how-to-account-for-bad-debts-with-the-direct-write-2/ outstanding is just the amount of all the company’s stock that’s in the hands of its stockholders. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Shares outstanding are used to determine a company’s market capitalization, i.e. the total value of a company’s equity, or equity value. Large lot trades by investors of closely held shares could significantly affect the stock’s price and the stock’s volatility. Heavy trading by closely held shareholders could also affect the stock’s weighting impact in free float capitalization indexes. If a company considers its stock to be undervalued, it has the option to institute a repurchase program.

Outstanding shares vs. stock float

The number of outstanding or issued shares is publicly disclosed through required regulatory filings for public companies. A company must often obtain board approval and record quantities via board meeting minutes whenever it decides to issue or sell additional shares. It must prepare appropriate documentation and ensure compliance with state and federal securities laws. The total number of a company’s outstanding shares as seen in the balance sheet is the sum of float and restricted shares.

A publicly-traded company can directly influence how many shares it has outstanding. Another metric calculated using shares outstanding is the price-to-book (P/B) ratio. Floating stock, which is also known as a company’s float, refers to the number of shares a company actually has available to trade in the open market. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Here’s what you need to know about outstanding shares and how they’re vital to determining the value of a company.