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# How to Calculate a Company's Weighted Average Number of Outstanding Shares?

Original post by Bryan Keythman of Demand Media

The weighted average number of common shares outstanding in a stock is the average number of shares outstanding during an accounting period, based on different amounts of shares outstanding at different times. You can calculate weighted average number of shares outstanding using information from a company's annual report, or its 10-K filing. A lower weighted average number of shares outstanding entitles stockholders to a larger portion of the company's earnings and assets.

## Contents

### Step 1

Find the number of common shares outstanding at the beginning of the year in a company's 10-K filing, which you can obtain for free from the U.S. Securities and Exchange Commission's EDGAR database. For example, assume a company had 600,000 shares outstanding at the beginning of the year, which is its beginning share count.

### Step 2

Find in the annual report the number of new shares the company issued during the year, and the month in which it issued them. In this example, assume the company issued 100,000 new shares in June.

### Step 3

Determine the number of months for which the company maintained its beginning share count until it issued new shares. Divide the number by 12 to determine the portion of the year for which it maintained its beginning share count. In this example, the company maintained its beginning share count from January through May, or five months, until it issued new shares in June. Divide 5 by 12 to get 0.42 -- this is the portion of the year for which it maintained its beginning share count.

### Step 4

Add the number of new shares issued to the beginning share count to calculate the number of shares outstanding after the issuance. In this example, add 100,000 to 600,000 to get 700,000 shares outstanding after the issuance.

### Step 5

Determine the number of months for which the company had its new number of shares outstanding after the issuance. Divide this by 12 to calculate the portion of the year for which it maintained this amount of shares. In this example, the company had its new share count from June through the end of the year, or seven months. Divide 7 by 12 to get 0.58.

### Step 6

Multiply the beginning share count by the portion of the year for which the company maintained the beginning share count. Multiply the share count after issuing new shares by the portion of the year for which the company maintained that share count. In this example, multiply 0.42 by 600,000 to get 252,000. Multiply 0.58 by 700,000 to get 406,000.

### Step 7

Add the two amounts to calculate the weighted average number of shares outstanding. In this example, add 252,000 and 406,000 to get 658,000 in weighted average number of shares outstanding.

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### Tips & Warnings

• A consistently increasing amount of weighted average number of shares outstanding will reduce the portion of your claim on the company's earnings.