What are Outstanding Shares?

Outstanding shares are the total number of shares of a company that are currently held by all its shareholders. These shares are owned by investors such as the public, promoters, institutions, and employees. However, they usually do not include shares held by the company itself. Also, because outstanding shares are used to calculate values like market capitalisation and earnings per share, they play an important role in understanding a company’s financial health. They could also help in understanding ownership and voting power in a company. This article explains how to calculate outstanding shares, different types of outstanding shares, how to find the number of shares outstanding, and more. 

How to Calculate Outstanding Shares? 

To calculate outstanding shares individuals can use the outstanding shares formula which is: 

Outstanding Shares=Issued Shares−Treasury Shares 

In the outstanding shares formula, 

Issued share is the total number of shares that a company has created and distributed to its investors whereas treasury shares are the ones that are issued by the company but later repurchased and are now under the company itself.  

Here is an example for better understanding. 

Suppose there is a company with 1 million issued shares. The company has repurchased 100,000 shares (treasury shares), so the outstanding shares would be: 

1,000,000 − 100,000 = 900,000 outstanding shares 

What are the Different Types of Outstanding Shares? 

The two main types of outstanding shares are Equity Shares (Common Shares) and Preference Shares. Here’s a breakdown of these two shares: 

• Equity Shares (Common Shares): Equity shares also known as common shares or ordinary shares are the most common types of shares issued by a company. People with equity shares can participate in some of the company’s decisions, such as in the election of the board of directors and the approval of major corporate actions. The equity shareholders are entitled to dividends; the amount depends on the company’s performance. These shareholders are paid after all the debts of the company have been settled.  
• Preference Shares: Preference shares take priority over equity shares in terms of payment of dividends and the repayment of capital at the time liquidation proceeds. Preference shares give fixed dividends to their shareholders. There are no voting rights given to preference shareholders in the company. 

Can the Number of Outstanding Shares Change 

The number of outstanding shares is not fixed and may change over time. To understand what are outstanding shares clearly, it is useful to know the common reasons behind such changes. 

Stock Splits 
In a stock split, a company divides its existing shares into a larger number of shares. This increases the total outstanding shares while the overall value remains unchanged. Companies may do this to improve affordability and market liquidity. 

Stock Dividends (Bonus Shares) 
In a stock dividend, a company often issues additional shares to existing shareholders based on their current holdings. These bonus shares tend to increase the total number of outstanding shares and are usually given as a form of reward to shareholders. 

Share Repurchases (Buyback) 
A share buyback occurs when a company purchases its own shares from the market. These shares are removed from circulation, which reduces the number of outstanding shares. Buybacks are often done to manage capital or balance earlier share issuance. 

How to Find the Number of Shares Outstanding 

There are several simple ways to check what are outstanding shares for a publicly listed company. These sources are commonly used by investors and readers. 

Financial Statements of Company 
Details about outstanding shares are usually mentioned in financial statements such as the balance sheet or notes to accounts. 

Investor Relations Section 
Most companies provide share-related information on their investor relations webpages, which are meant for public access. 

Regulatory Filings 
Public companies submit regular reports to regulators, and these documents often mention the current number of outstanding shares. 

Financial Information Websites 
Well-known financial news platforms such as Google and Yahoo finance usually offer updated data on outstanding shares along with other stock-related details. 

Stock Exchange Websites 
Stock exchange websites where the company is listed may also provide information about outstanding shares. 

Conclusion  

To understand a company’s market value and investment potential, it is important to gain knowledge about what outstanding shares are. Outstanding shares represent all the shares held by investors, excluding those repurchased by the company. They are crucial for calculating market capitalisation, EPS, and dividends. For real-time data on outstanding and floating shares, consider using a share market app. These apps provide up-to-date information and analytics, helping investors make informed decisions efficiently.