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Authorized common stock refers to the total number of shares a company could issue. Typically, companies don't issue all of their authorized shares -- this gives them financial flexibility to issue new shares to raise capital, and to issue stock awards to employees.
Before we discuss how to calculate a company's percentage of authorized common stock issued, there are a few terms related to a company's number of shares that you should be familiar with:
When preparing to calculate the percentage of a company's authorized shares that have been issued, the information you need can be found on its balance sheet. You can find the balance sheet in its annual report or in any of its quarterly reports.
Locate the stockholders' equity section, which is toward the bottom of the balance sheet. There should be a "common stock" section, which can tell you the number of issued shares as well as the number of authorized shares.
Divide the number of issued shares by the number of authorized shares, and then multiply by 100 to convert to a percentage.
Percentage issued = (Issued shares / Authorized shares) × 100
Let's say that I want to determine the percentage of Best Buy's (BBY +1.47%) authorized shares that had been issued as of the end of the 2015 fiscal year. Looking at Best Buy's 2015 annual report, I can find the balance sheet in the financial statements section of the report. In the stockholders' equity section, the company says that it is authorized for up to 1,000,000,000 shares and has issued 351,468,000 of these. Based on this information, we can see that Best Buy has issued 35.1% of its authorized shares.
Percentage issued = (351,468,000 / 1,000,000,000) × 100 = 35.1%
