By using existing cash, firms can purchase shares back more aggressively, decreasing their total outstanding shares and increasing earnings per share (EPS). This means that every share investors held before the split will now have double or triple the number of shares. As an investor, finding out a company’s number of outstanding shares could be a key piece of information when considering investing in the company.

How Outstanding Shares Work

The common stock outstanding of a company is simply all of the shares that investors and company insiders own. This figure is important because it translates a company’s overall performance into per-share metrics, making an analysis much easier regarding a stock’s market price at a given time. If there are 100 shares outstanding and you buy one, you own 1% of the company’s equity.

Outstanding Shares vs. Treasury Shares

Outstanding shares play a pivotal role in determining a company’s market capitalization, earnings per share (EPS), and shareholder influence. Investors use this information to gauge the company’s financial health and potential for growth. The number of shares outstanding for a company is equal to the number of shares issued minus the number of shares held in the company’s treasury. If a company buys back its shares outstanding calculation own stock, those repurchased shares are called treasury stock. 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. Those instruments can be “in the money” if the exercise price — the price designated for the stock by the option or warrant — is below the stock’s trading price.

HOW THE MOTLEY FOOL CAN HELP YOU

The weighted average of outstanding shares is a calculation that incorporates any changes in the number of a company’s outstanding shares over a reporting period. The reporting period usually coincides with a company’s https://www.bookstime.com/articles/is-unearned-revenue-a-current-liability quarterly or annual reports. The weighted average is a significant number because companies use it to calculate key financial measures with greater accuracy, such as earnings per share (EPS) for the time period.

The weighted average is a mean value calculated by averaging each quantity against an assigned weighting to determine the relative importance of each quantity. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Assuming all option holders exercise, Company A would issue 10 million shares. With the $50 million in cash, in theory it could instantly repurchase 5 million shares at $10 each. Obviously, those option holders in theory could exercise their options to create new shares. Should they do so, however, they would also contribute $50 million in cash to the corporate treasury.

How to Calculate Shares Outstanding (Step-by-Step)

• The total number of outstanding shares can’t be greater than the total number of authorized shares as laid out in a company’s articles of incorporation.
• This figure is important because it translates a company’s overall performance into per-share metrics, making an analysis much easier regarding a stock’s market price at a given time.
• The inputs you’ll need for this calculation are located on the balance sheet.
• As an investor, understanding how to calculate stock price per share is crucial in making informed decisions about your investments.
• Investors can find the total number of outstanding shares a company has on its balance sheet.
• New share issues, the exercise of stock options, conversion, and cancellations through buybacks will change the figure.