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Common Stock Formula (Example) | How to Calculate Common Stock? - YouTube
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below welcome everyone in today's topic
is common stock formula today's topic is
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all about accounting and it is a part of
the shareholders equity portion well
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common stock formula is basically the
number of the issued shares minus the
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Treasury stocks you'll be asking what
exactly strategy stocks well we are
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gonna go into that nitty-gritty to
understand this this formula ok first of
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all what is the common stock formula
assume is that see the common stocks are
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the number of the common stocks are the
number of the shares overcome and they
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are found in the balance sheet now
companies report the information on the
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common stock in the company's filing
both in 10 q and then 10k in the balance
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sheet the common stock is in the equity
part there are 3 important aspects
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to understand as far as the common stock
equation is concerned one is called the
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authorized capital that is part of it
and then the another one the other one
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is basically below that is the issued
capital and then the outstanding shares
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so when we talk about the outstanding
shares outstanding shares are the number
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of shares that is available to the
owners owners of the company who holds a
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portion of the business so
holder's can be company's insider they
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can be the company's insider or the
outside shareholders another important
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part to calculate the outstanding share
is the Treasury stocks of the company so
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the formula for the calculation the
common stock is the number of the
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outstanding shares that is issued it is
called the issued stock minus the Treasury
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stock now all the information regarding
the common stock issued shares Treasury
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in the balance are reported in the
balance sheet in the shareholders equity
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section so the number of the outstanding
shares is equal to the number of shoot
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shares minus the Treasury stocks let's
understand the explanation of the common
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stock formula the common stock holders
are the owners of the company and have
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they do have what we call as the voting
rights and also they receive the
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dividend the parts of the common stocks
are basically authorized capital issued
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shares and then the Treasury stocks post
facto outstanding shares so the
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outstanding shares are the number of
shares that is available to the owners
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of the company who holds a portion of
the business so these holders can be
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also called the company insiders or the
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outside share holders now the total
outstanding share is where the analyst
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and an amazing company is looking at so
to understand this with the help of thee
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let's understand this with the help of
the example now the example will be of
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of the common stock formula whose as
let's see some of these simple examples
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first one example number one let us take
an arbitrary example of a company aid if
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I know how to calculate the number of
the outstanding shares of the company so
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now we will also try and understand what
authorize share is issued shares and
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Treasury stocks means was the number of
the authorized shares for a company is
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5,000 shares then in that scenario
suppose a Treasury stock portion is
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equal to 500 shares and the authorized
share is the maximum number of the
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shares come can issue which is mandated
during the public offering of a company
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so the snapshot of this can be learned
something like this the authorized
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shares is 5,000 shares the those are
issued 2000 and then there is
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Treasury stocks which is standing at
500 so the calculation of the
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outstanding shares will be calculated at
something like this company a this is
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all company is A data control V leaders
so the number of the outstanding shares
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is equal to your shares that have been
issued less the Treasury stock that is
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1500 right so the number of
the outstanding shares is 1500
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therefore the number of the
outstanding shares will be
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1500 a company cannot issue shares
more than the authorized number of
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shares but it can issue less than the
number of the authorized shares so
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suppose the company has issued 2000 shares during the public
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offering so in that case the number of
the shares issued is equal to the
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outstanding shares of the company so the
company sometimes what they do is called
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the buyback process which is a part of
the corporate start
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strategy so if the company buybacks its
chest and the that portion of the share
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is with the company and the owners of
the equity to not own these shares okay
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let's understand this with the help of
the example number two let us look at
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the common stock of the company from its
quarterly filing the common stock of a
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AK Steel is a u.s. stock of a steel
industry and let's understand some of
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these snapshots of the shareholders
equity section of the company's AK Steel
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now the company clearly reports in his
quarterly filing the information for its
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common stock now the information
includes the number of the authorized
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shares which is the maximum amount of
the shares that the company's includes
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well let me write some of the details
first is the authorized shares okay then
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they were this is the detail of AK Steel
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and then there is treasury shares well
so therefore the calculation of the
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number of the outstanding shares will be
what will be the shares we should- the
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Treasury stock that tends months to
closely around a million words so the
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number of the outstanding shares is
315,510,490
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so the number of the authorized
shares of AK steel is this and the
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company has issued lesser number of
shares that then it's authorized to
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issue which is 316 and the
number of the treasury shares for the
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company which is the number of shares
bought back by the company and it's no
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longer part of the shares and also do
not receive any dividend that it is the
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treasury shares right let me take an
example number three let us look at the
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common stock company from its Quatro
filing the company let's say United
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Steel
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of us stock office steel industry now
let's understand the snapshot of the
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shareholders equity first this was AK Steel now we have United steel so
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this is basically the snapshot of the
United Steel numbers the calculation of
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the number of the outstanding shares
will be something like this just to
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control R and you will have the answer
well the number of the outstanding
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shares is 177 258 so the information
includes the number of the authorized
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shares which is the maximum one of the
shares the company can issue and the
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number of the authorized shares of the
AK Steel is closely around
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3002 and the company issued a
lesser number of shares it is authorized
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to issue which is 177 258 so the number
of the treasury shares of the company
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which is the number of the shares bought
back by the company is and is no longer
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the part of the all sunny share and also
do not receive any dividend is 96 399 so
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now what exactly is the use of this see
the number of the common stock of the
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company in the shareholders equity
section of the balance sheet signifies
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the ownership of the company now the
shoulders of the company are the owners
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of the company and the of the shares in
the whole either the promoter for
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company insider or any other outsider
signals what portion of the ownership
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that entity has on that company the
shareholders have what we call as the
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voting rights and they receive the
dividend from the company based on the
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percentage of shares they have hold in the
company the figure is very crucial for
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the calculation of the common stock
equation that is all the Per share metrics
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calculated in order to value the company
and these metrics like book value per
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share earning per share dividend per
share the common stock calculation is
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done with the number of the shares as
the denominator 1 so we'll that's it for
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this particular topic if you've learned
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