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How to calculate the number of outstanding shares

Updated March 23, 2017

One of the most common forms of raising capital is stock issuance. A company can issue stock to the public in exchange for funds. Each share of stock represents an ownership interest. The number of shares outstanding includes the shares issued to the public as well as restricted shares and shares owned by the employees of the company. Shares that were repurchased by the company, also called treasury stock, are not included in the calculation of shares outstanding.

Download or request a copy of the company's annual report. The annual report can usually be found on the company's website or by contacting investor relations.

Turn to the balance sheet. This is the financial statement that details the company's assets, liabilities and stockholders' equity.

Scroll to the section titled Stockholders' Equity. Look for the line item Restricted shares. Restricted shares refers to stock issued by the company that cannot be bought or sold without approval from the Securities and Exchange Commission (SEC).

Look for the line item Authorized shares. Authorised shares is the total number of shares a company can issue. It is a number that can only be set and changed by the board of directors.

Calculate outstanding shares. Add the number of shares that the company has actually issued to the number of restricted shares. Treasury shares are excluded. For instance, if the company has 1000 shares authorised, 100 shares being restricted by the SEC, 100 shares as treasury stock and 500 shares issued to the general public, the calculation would be 100 restricted shares plus 500 issued shares minus 100 treasury shares, equalling 500 shares outstanding. This leaves another 500 shares available to be issued to the public.

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About the Author

James Collins has worked as a freelance writer since 2005. His work appears online, focusing on business and financial topics. He holds a Bachelor of Science in horticulture science from Pennsylvania State University.