Outstanding Shares - Definition, Formula, Types - YouTube

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by clicking the bell ican friends never going to learn a concepts which is

outstanding shares and then the definition formula in the same let's see

the graph over here if you see the amazons diluted shares outstanding and

Amazon's basic shares which is in orange and the diluted is in blue there is a

difference over here let's understand this see first and the foremost thing

let's leave this graph here and understand what are the outstanding

shares see outstanding shares of the shares that are being owned by these

stockholders company officials and the investors in the public domain it

includes all the retail investors also like and also the institutional

investors and inside is however the stocks outstanding does not include any

sort of the Treasury stock it is not in so company always often keeps a portion

of its outstanding shares of the stock in its own Treasury from both are the

initial stock issue as well as the stock repurchase which are also known as

Treasury shares and they are not included in the outstanding balance and

increasingly the tradition the treasury shares will always result in decrease in

the outstanding shares and why sales are the case so let's understand are the

outstanding shares versus the authorized shares

in detail former outstanding shares basically and authorized shares yet now

the outstanding shares basically it differs from the author issues as you

know the authorized shares are the number of shares that are corporate

legally is allowed to issue whereas you know the outstanding shares this is

authorized over here the outstanding stock the outstanding shares outstanding

stocks are the one that are been already that has been issued so this is the key

difference in the market now at any given point of time the outstanding

number of stock cannot be this cannot be it has to be less than the number of

authorized shares generally the company authorizes more shares than the actual

issue a reason for its efficiency and practicality if the company shows all

the all the authorized shares but then need to grant more shares in future the

company would need to authorize more shares at that point of time now this

requires the board and the stockholders vote and then a document to be file you

know this cost money the legal fees and filing that either I involved in now if

the company has excess authorized shares it can issue those with much lesser for

typically just approval at the border it was really very handy now let's

understand the outstanding shares formula

see the outstanding shares formula goes something like this outstanding shares

is equal to your issued stock less the Treasury

stop this is gonna be the different this is a formula the number of the stock

outstanding is equal to the number of the issued shares minus the shares held

in the company's Treasury so it is also equal to the float you can say that

float means the shares that are available to public and excluding any

restricted shares or the shares held by the company officers or insider plus any

restricted shares like for example if a company issues let's say a total of

1,000 shares and

600 shares are issued as let's say floating share to the general public and

200 are kept at the company's Treasury in this case the company has total how

much 800 the company has in total 800 shares right outstanding and 200 as the

Treasury now there are two type of shares outstanding the one is called the

basic we now we are getting closer to that what we call as the graph that we

saw in the very beginning the basic shares outstanding and the second that

we have is the fully diluted shares outstanding basic shares outstanding

means that you know the number of the outstanding stocks currently

currently that outstanding while the fully diluted shares number takes into

account the things such as like you know warrants

capital notes and convertible stock so in other words the fully diluted number

of shares outstanding tells you how many outstanding shares that could be

potentially be wardens are basically you know they are the instrument that gives

the holder right to purchase more outstanding shares of the stock from the

company's Treasury now whenever warrants are activated stock outstanding

increases while the number of the Treasury stock rises like for example it

says suppose is a company called XYZ and it issues let's say 100 a warrant if

all the warrants are activated then XYZ will have to sell in total 100

shares from its Treasury note do you know why the shares outstanding keeps on

changing why it keeps on changing the shares outstanding I'm talking about you

see outstanding shares will increase when the company increases the share

capital by selling the new stock in public this can be the first take off or

when it declares a stock split when it declares their own stock split

in that scenario also it can happen conversely know this talk outstanding we

can decrease if a firm can say that completes our share buyback

I mean that's got repurchase of its own shares by the company which decreases

the number of the outstanding stock in the public and it increases the treasury

shares amount and there is another thing that is called as the reverse stock

split which means I mean that is the consolidation of the corporate

corporation shares according to the predetermined ratio

now how this shares outstanding they affect the investor how do they affect

the investors see a greater number of or shares outstanding

means that no more stable company and the greater price stability as it takes

many more shares traded to create significant movement in the stock

contrary to this the outstanding shares of the stock with much lower number of

shares outstanding then in that scenario it should be more vulnerable to the

price manipulations and requires much fewer shares to be traded up or down to

move the stock price now as the number of these stock prices are important

value for an investor as it is included in the latest market cap it is included

in the latest market cap and the EPS that is the earning per share

calculation it is really very important to be understood in that's let in that

scenario let's understand an example let's say there's a company here which

which has issued 25800 shares and it's it has up offered let's say 2000 shares

to two partners and as read and let's say 5500 stocks in the Treasury so the

outstanding shares formula is the shares issue - the treasury shares so it's

gonna be 2,500 - 5500 less you need to deduct that is 2 into 2000 the ones who

deduct this shares from here you get 16300 that's

the outstanding shares formula I suppose this stock is let's say currently

trading at 35.65 therefore the market cap of the phone of

the firm is going to be 16 three hundred into the share price so that's

gonna be $581095 now Company A let's have let's

say it has a net income of 12,500 as for the latest financial and therefore the

firms earning per share is going to be 12500 divided by

the number of shares that is 16300 so that's gonna be

0.77 right so this is the example that you should understand see

as the number of the outstanding shares of the stock decreases by 1000

the company's EPS over here will also decrease closely by 6.4%

with those numbers outstanding and also the stock outstanding is

important parameter used in calculations of the PV ratio which is the indicator

of much indicator of you know how much the shareholders are paying power for

the net assets of the company so that's it for this particular topic of

outstanding shares so that's it for this particular topic if you have learned and

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