Shares outstanding

Category:Financial analysis
Alternative names: outstanding shares issued shares capital stock

What is Shares Outstanding

Shares outstanding is the total number of shares that have been issued by the company and are currently held by all of its shareholders (including institutional investors and company’s officers and insiders). In other words, shares outstanding is the total number of shares on the open market.

The number of outstanding shares for a given company can change over time for a number of reasons. It usually increase when the company is issuing additional shares either to raise capital or via employe stock options. The number of shares outstanding decrease when the company is buying back shares as a part of assets allocation program (Share Repurchase Programs). Additionally the number of shares outstanding will increase if a company does a stock split and it will reduce if it creates a reverse stock split.

The shares outstanding should be differentiated from treasury stock, which is shares that are held by the company. Shares outstanding and treasury shares together amount to the total number of issued shares.

How to find Shares Outstanding of a company

Shares outstanding number can not be calculated but they are rather reported by the company. Publicly traded companies are obligated report the number of newly issued and the number of outstanding shares.
The number of shares outstanding is listed on a company’s balance sheet and its reported quarterly and/or annually

Shares outstanding vs Float

Floating shares are the number of shares that are available for trading and this number excludes the closely held shares that are held by company insiders or controlling investors (like company directors and founders).

Why is Shares Outstanding number important to know

The shares outstanding number is important for variety of reasons. First it is number that is included in multiple formulas for calculating per share metrics lie earnings per share, dividend per share, as well as for calculating market cap of a company. Additionally keeping an eye of the number of shares outstanding over time can be a good indicator of the company’s management assets allocations activity as its will show you when the company is issuing new shares to rase capital or buying back shares as distribution method for shareholders.

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