How to calculate outstanding shares from balance sheet?

Submitted by admin on Thu, 12/09/2021 - 18:31

The total number of outstanding shares = preferred stock shares + common shares - treasury shares

 

The term "outstanding shares" refers to the total number of shares issued to investors by a firm.
The following methods will assist you in determining the total number of outstanding shares:


Navigate to the company's balance sheet and search for the shareholders' equity section at the bottom of the report.


Look for the preferred stock line item.
This line denotes a unique class of shares that confers specific benefits on investors, such as a periodic dividend.
There may be no preferred shares at all.
Within the line item description, there should be a declaration indicating the number of outstanding shares.
Maintain the quantity of outstanding preference shares.


Take a look at the common stock line item.
This is the most common type of stock given to investors.
Within the line item description, there should be a declaration indicating the number of outstanding shares.
Maintain the number of outstanding ordinary shares.


Look at the treasury stock line item.
This line item relates to shares that have been repurchased from investors; if the firm has never repurchased shares, this line item will be absent.
If the line exists, the line item description should include a statement indicating the number of shares repurchased.
Keep track of this number.


Add the total number of outstanding preferred and common shares and remove the total number of outstanding treasury shares.
The total number of outstanding shares is the outcome.

The total number of outstanding shares = preferred stock shares + common shares - treasury shares


If there is a discrepancy between the number of shares issued and the number of shares outstanding, the discrepancy is referred to as treasury stock.
In other words, a business has issued shares and subsequently repurchased part of them, resulting in a lower number of outstanding shares.


The number of outstanding shares is significant information for an investor considering investing in a firm.
Divide the number of shares to be acquired by the total number of shares outstanding to get the investor's percentage ownership in the firm once the shares are purchased.