The number of shares of common stock outstanding is a metric that tells us how many shares of a company are currently owned by investors. This can often be found in a company's financial statements, but is not always readily available -- rather, you may see terms like "issued shares" and "treasury shares" instead. Besides, it can be helpful to understand where the numbers you're looking at came from.
Here's what you need to know about the different share counts that publicly traded companies use, as well as how you can calculate the number of outstanding common shares.
Many different terms for the number of shares of stock
When examining a company's financials, or reading analysis about a stock, you may come across several different terms describing the number of shares of stock that exist for a company. These include:
- Float: The shares that are currently available to be bought and sold by the public.
- Restricted shares: Shares that cannot be bought or sold without permission from the SEC, generally held by company insiders or institutional investors.
- Issued shares: The total number of shares a company has ever issued. This includes shares that were made available to be bought and sold by the public, as well as shares bought by or issued to company insiders and institutional investors.
- Outstanding shares: The total number of shares that are currently available to be bought and sold, as well as shares held by institutions and insiders.
- Authorized shares: The total number of shares a company could issue.
- Treasury shares: Shares that a company has bought back and are held in the company's treasury.
- Preferred shares: A special kind of stock that pays a fixed dividend, much like a bond.
How to calculate outstanding shares
Of these terms, the two that you need in order to determine the number of outstanding shares are issued shares, and treasury shares. Because issued shares refers to the total number of shares a company has created, and treasury shares refers to shares that have been issued but bought back, subtracting these two numbers results in the number of outstanding shares. Generally, both of these figures can be found on a company's balance sheet.
As a real-world example, here is some information from Johnson & Johnson's 2014 year-end balance sheet. The company has 4.32 billion authorized common shares, of which 3,119,843,000 have been issued as of December 31, 2014. Next, 336,620,000 shares were held in the company's treasury at that time, so subtracting this from the number of issued shares means that Johnson & Johnson had 2,783,223,000 outstanding shares at the end of 2014.
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