Shares Outstanding Formula Calculator Examples with Excel Template

The Company form, which is one of the most popular forms of conducting business, issues shares to the owners in proportion to the Equity capital they contributed to the business. The owners hold the outstanding shares at a particular point after adjusting for any shares reacquired by the company, such as Treasury stock, etc. Note that many companies do not have preferred shares, and for those companies, there are no preferred dividends that need to be deducted. The reason preferred dividends are deducted is that EPS represents only the earnings available to common shareholders, and preferred dividends need to be paid out before common shareholders receive anything. Employee stock options, shares, and restricted share units are subject to a vesting period, typically between two and five years. Since some employees will quit before their shares vest, companies typically make an estimate, based on judgment, about forfeitures and the total number that will actually vest.

Issued stock is the total number of a company’s sold shares held by shareholders. The numerator in the earning per share (EPS) formula is net income from the income statement, which tracks the financial performance of a company over a period of time. Public companies are required to report their number of shares outstanding in their quarterly and annual disclosures to the Securities & Exchange Commission. Conversely, the outstanding number of shares will decrease if the company buys back some of its issued shares through a share repurchase program. The company can increase or decrease the number of shares outstanding by issuing new shares or via share repurchases (buybacks).

Shares outstanding vs float

To calculate the weighted average of outstanding shares, multiply the number of outstanding shares per period by the proportion of the total time covered by each period. Then, add those terms together to get the weighted average number of outstanding shares. ABC Limited has an Authorized Share Capital of $ comprising shares of Face Value of $10 each. The company has an issued share capital of 8000 shares as of 31st December 2019. As of the same date, no treasury stock is outstanding, and all the issued shares are outstanding. The number is more valuable when analyzed against other companies in the industry, and when compared to the company’s share price (the P/E Ratio).

In other words, a company has issued shares and then bought some of the shares back, leaving a reduced number of shares that is currently outstanding. For example, the price-to-earnings (P/E) ratio calculates how much investors are paying for $1 of a company’s earnings by dividing the company’s share price by its EPS. Moreover, the number of shares outstanding is extremely useful when monitoring how a company conducts its business, as things like stock splits also affect share numbers. Companies that have publicly traded stocks in the United States are required to file public financial disclosures to the Securities and Exchange Commission (SEC) which include the company’s balance sheet. You can also find the company’s balance sheet in its annual report, which can often be found on the company’s website. At any moment in time, a corporation has a specific number of shares that it has authorized for sale, to individual or institutional investors.

Stock Splits and Reverse Stock Splits: Share Count Effect

The number of shares outstanding consists of shares held by institutions, restricted shares held by company insiders, and shares available for investors to buy and sell on the open market. Finally, outstanding shares are different than authorized shares, or the number of shares that a corporation is legally allowed to issue. Outstanding stocks are the shares that are actually already out on the market. Most public companies use stock-based compensation as a way of incentivizing and rewarding their employees. By granting stock to employees, the companies are increasing the number of shares outstanding, which causes dilution and needs to be factored into the financial analysis. The float, for instance, has no bearing on market capitalization or earnings per share.

Of course, merely increasing the number of outstanding shares is no guarantee of success; the company has to deliver consistent earnings growth as well. The number of shares outstanding increases whenever a company undertakes a stock split. Stock splits are usually undertaken to bring the share price of a company within the buying range of retail investors; the increase in the number of outstanding shares also improves liquidity. The first formula uses total outstanding shares to calculate EPS, but in practice, analysts may use the weighted average shares outstanding when calculating the denominator. Since outstanding shares can change over time, analysts often use last period shares outstanding. Below is an example of how to calculate diluted shares outstanding for a company, as well as basic and diluted EPS.

What are Outstanding Shares?

Investors who hold common stock exercise control by being able to vote on corporate policy and electing the company’s board of directors. It’s important to note that outstanding shares do not include treasury stock, which are shares that were shares outstanding formula once owned by investors that a corporation has repurchased. They also do not include preferred shares, which are stocks that do not carry shareholder voting rights, but do give their owners some ownership rights and pay a fixed dividend.

Suppose a company issues 1000 shares and 200 shares are kept in the company’s treasury, determine the company’s shares outstanding. 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, while calculating the dilutive EPS, the denominator includes all possible conversions that can take place and increase the number of shares held by parties. Diluted EPS is always less than the basic EPS, as the denominator in the latter is higher.