How to Calculate the Common Stock Outstanding From a Balance Sheet
Original post by Bryan Keythman of Demand Media
The number of a company's shares of common stock outstanding is the number of shares that investors currently own and has a direct effect on your ownership interest as a stockholder in the company. If the number of shares outstanding rises due to a company issuing additional shares, your percentage ownership will fall. If the number decreases, your percentage ownership will increase. A company typically lists its number of shares of common stock outstanding directly on its balance sheet in its "Stockholders' Equity" section. If it doesn't, you can calculate the number based on other information provided on the balance sheet.
Find the "Stockholders' Equity" section of a company's balance sheet and identify the "Common Stock" line item.
Identify the number of shares issued in the line item's description. Issued shares are the shares that the company has sold to investors, which includes the shares outstanding and shares it has repurchased as treasury stock. For example, assume a company has 10 million shares issued.
Find the "Treasury Stock" line item in the "Stockholders' Equity" section and identify the number of shares of treasury stock. Treasury stock is stock the company has bought back from shareholders. A company may buy back shares if it believes its shares are undervalued or to reduce its number of outstanding shares. In this example, assume the company has 1 million shares of treasury stock.
Subtract the number of shares of treasury stock from the number of issued shares to calculate the number of common shares outstanding. In this example, subtract 1 million shares of treasury stock from 10 million shares issued to get 9 million shares of common stock outstanding at the end of the accounting period.
Tips & Warnings
- If a company has no shares of treasury stock, the number of shares issued will equal its number of shares outstanding.
- Check the number of shares of common stock outstanding each quarter to see if your ownership percentage is changing.
- Stanford University; Shares Outstanding; Michael Fan; 2006
- New York University, Stern School of Business; Financial Accounting & Reporting -- Review Chapter 10; Lucile Faurel
- University of Massachusetts Lowell: Reacquiring Shares of Stock
About the Author
Bryan Keythman has performed stock investment research and writing for a consulting firm since 2008. He also has prior experience sourcing and underwriting commercial real-estate investment and development opportunities for a commercial real-estate developer. Keythman holds a Bachelor of Science in finance.
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