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How to Find the Sum of Common Stock on a Balance Sheet

By Motley Fool Staff – Updated Oct 20, 2016 at 5:33PM

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It's easy to find the sum of common stock on a balance sheet -- if you know what all those terms and numbers mean.

If you want to find out the total of common stock a company has, the information can be found right on the stockholder's equity section of its balance sheet. Here's how to find it, and what all of the relevant information means.

Before we dive in, consider the stockholder's equity section from Realty Income Corporation's 2014 balance sheet.

As you can see there are two different kinds of stock listed and a few different share counts. Here's what it all means.

Stock: common vs. preferred
There are two main types of stock you'll see listed on the balance sheet: common and preferred.

  • Preferred stock is similar to a bond in the sense that it pays a fixed dividend, and it has a higher priority when the company pays dividends and distributes assets. However, preferred stockholders have no voting rights and are lower on the totem pole than bondholders.
  • Common stock is what most people think of when they hear the word "stock." Common stock represents ownership rights in a company. Common shareholders are behind bondholders and preferred stockholders when it comes to receiving dividends or assets in the event of a bankruptcy -- but common stockholders do have voting rights.

Authorized, issued, and outstanding shares
You'll also notice from the image above that there are three different terms used to describe the number of shares a company has.

  • Authorized shares refers to the number of shares a company is permitted to issue, as determined by its articles of incorporation or by a vote of its shareholders. Generally, companies don't issue all of the shares that are authorized.
  • Issued shares are the shares a company has issued out of its authorized shares.
  • Outstanding shares are the shares of stock a company has issued, including restricted shares and shares held by institutional investors, but not including any shares held in the company's treasury, such as those resulting from buybacks. This is the number of shares used to calculate earnings per share (EPS) and other "per share" metrics.

Par value
You'll notice that the share in the picture have a par value of just $0.01. However, it's important to note that this number is typically very small and has no connection to the stock's market value -- it is simply a technical term for a stock's legal capital. For example, if a company issues preferred stock for $25 per share with a par value of $0.01, $24.99 is considered paid-in capital.

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