What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


How to Calculate Total Common Shares Outstanding

Original post by David Carnes of Demand Media

The Securities and Exchange Commission regulates the public sale of corporate shares.

When a corporation is formed it issues shares to investors to raise money in exchange for an equity stake in the company. Although shares are often sold to private investors, a corporation may sell its shares on a public stock exchange if it meets certain requirements. All corporations issue common shares, and some issue preferred shares as well. A corporation may issue additional shares from time to time, and may buy back its own shares. Common shares outstanding are the number of common shares that have been issued but have not been bought back by the company.

Step 1

Obtain a copy of the corporation's most recent financial statement. Its financial statements might be available on its website. If you are a shareholder, however, you may request a copy by contacting the corporation.

Step 2

Locate the company's balance sheet on of the four parts of the corporation's financial statement. Find the "shareholders' equity" section. In this section there will be a line called "common stock" that is accompanied by a dollar figure representing the value of all common shares issued by the corporation.

Step 3

Divide the value of common stock issued by the share price. This will give you the number of common shares issued.

Step 4

Find the line entitled "treasury stock" in the shareholders' equity section of the balance sheet. Divide the dollar value listed there by the share price. This will give you the number of treasury shares held by the corporation. Treasury shares are shares of common stock bought back from investors by the corporation. They are not considered outstanding shares.

Step 5

Subtract the number of treasury shares from the number of common shares issued. This will give you the number of common shares issued and outstanding.

                   

Tips & Warnings

  • While common shareholders may vote on important corporate decisions, preferred shareholders usually are not entitled to vote.

Resources

References

About the Author

David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.

Photo Credits

  • Comstock/Comstock/Getty Images

Advertisement