The number of shares outstanding is a crucial concept in finance, and it's actually quite simple. The number of shares outstanding equals the number of shares, period.
This means that the total number of shares issued by a company is equal to the number of shares that are currently outstanding. In other words, if a company has issued 100 shares, then 100 shares are outstanding.
The number of shares outstanding is important because it affects the company's capital structure and the value of each share. For example, if a company has a small number of shares outstanding, each share may be worth more because there are fewer shares in circulation.
In the end, understanding the number of shares outstanding is essential for investors, analysts, and anyone interested in a company's financials.
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What Are
Outstanding shares represent the number of a company's shares that are traded on the secondary market and available to investors.
The number of outstanding shares includes all restricted shares held by a company's officers and insiders, as well as the equity portion owned by institutional investors.
Outstanding shares increase when a company issues additional shares or when employees exercise stock options.
This boost in shares can increase liquidity but also dilute the ownership stake of existing shareholders.
An initial public offering (IPO) can also increase the number of outstanding shares by exchanging equity stakes in the company for financing.
Conversely, the number of outstanding shares decreases when a company buys back some of its issued shares through a share repurchase program.
Stock Issuance and Splits
A company's number of shares outstanding is the number of shares investors and company executives currently own.
The number of issued shares is the number of shares that have ever been traded in the stock market, and it includes any shares the company has bought back and now holds in its treasury.
The term "float" refers to the number of shares available to be traded by the public, excluding any shares held by company executives or the company's treasury.
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Microsoft Stock Splits
Microsoft has split its stock nine times since going public in March 1986. The most recent split was a 2-for-1 common stock split announced on January 16, 2003.
A 2-for-1 split means the investor will have twice as many shares as he had before, at half the market price. This is the case for Microsoft's most recent split, where an investor owning 100 shares of MSFT would have had their total value remain the same at $5,000.00, despite having 200 shares of stock with a market price of approximately $25.00/share.
The decision to split the stock was made by Microsoft's Board of Directors, based on a desire to make their stock more accessible to a broader range of investors. This decision has been made several times in the past, with the Board of Directors taking the initiative to make their stock more accessible.
One original share will equal 288 shares after the most recent split is effective. This is the result of the nine stock splits that have taken place since Microsoft went public in March 1986.
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Here's a summary of Microsoft's common stock splits since the initial public offering on March 13, 1986:
*Type of split:
2 for 1 = One additional share for every share held (multiply the number of shares by 2 for a new total)
3 for 2 = One additional share for every two shares held (multiply the number of shares by 1.5 for a new total)
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How to Find Share Issuance
Finding share issuance can be a bit of a challenge, but it's not impossible.
To start, you need to check the company's articles of association, which outline the rules for issuing new shares. This is usually available on the company's website or through a public records search.
The articles of association will specify the procedures for issuing new shares, including the types of shares that can be issued and the conditions under which they can be issued.
You can also check the company's prospectus, which is a document filed with the regulatory body when the company goes public. The prospectus will outline the company's capital structure and the terms of any share issuance.
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In some cases, the company may also issue a press release or make a public announcement about the share issuance. You can check online news sources or the company's website for this information.
The share issuance will also be recorded in the company's register of members, which is a public document that shows the ownership structure of the company.
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Share Capital
The number of shares outstanding is a crucial concept in finance, and it's actually quite simple to understand. It's equal to the number of shares issued minus the number of shares held in the company's treasury, also known as treasury stock.
Companies can buy back their own stock, which reduces the number of shares outstanding. This can happen when a company repurchases shares from the public or employees redeem stock options.
The number of shares outstanding can fluctuate over time due to various reasons. For example, if a company sells more shares to the public or splits its stock, the number of shares outstanding increases.
A company's basic number of shares outstanding can differ from its fully diluted number of shares. The basic number is the number of currently outstanding shares, while the fully diluted number accounts for share equivalents of all warrants, capital notes, and convertible stock issued.
Apple's balance sheet from 2016 to 2020 shows a significant decrease in total shares outstanding, from over 21 billion to less than 17 billion. This was largely due to the company buying back billions of dollars' worth of its own stock during this period.
Understanding Share Counts
The number of shares outstanding for a company equals the number of shares issued minus the number of shares held in the company's treasury.
If a company buys back its own stock, those repurchased shares are called treasury stock. This can increase the number of shares outstanding over time.
The number of shares outstanding can fluctuate due to various events, such as a company selling more shares to the public or employees redeeming stock options.
A company's basic number of shares outstanding can differ from its fully diluted number of shares, which accounts for warrants, capital notes, and convertible stock.
The basic number represents the number of currently outstanding shares, while the fully diluted number indicates how many outstanding shares there could potentially be if all existing equity instruments were converted into common stock.
Apple's balance sheet shows a decrease in total shares outstanding from more than 21 billion in 2016 to less than 17 billion in 2020, due in part to billions spent buying back its stock during those years.
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Frequently Asked Questions
Is the number of shares the same as shares outstanding?
No, the number of issued shares and shares outstanding are not always the same, as issued shares include all stock a company has ever issued, while outstanding shares are those currently circulating in the market. The difference lies in shares that have been repurchased or are held by the company itself.
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