Shares outstanding refers to all the issued shares of the company which are currently owned by owners, company officials, institutional investors and general members of the public but does not include the shares which were repurchased by the company or treasury stock.
The shares outstanding of a listed company can be easily accessed as it is disclosed in the quarterly shareholding pattern filed with the stock exchanges, quarterly income statement of earnings, balance sheet and annual report, other important financial reporting documents. This can also be computed by dividing the outstanding equity share capital by the face value of the share.
e.g. Paid up equity share capital of Kalpataru Power Transmission is Rs. 30.69 crore.
Face value is Rs. 2 each.
Thus, number of equity shares outstanding of the company is 30.69 / 2 = 15.35 crore shares outstanding.
While generally shares outstanding is considered as equity shares outstanding, it can also be preference shares outstanding for companies which have issued preference shares. The number of shares outstanding can increase or decrease if a company undertakes a stock split action or a buyback option respectively.
Shares outstanding helps us to determine the market capitalisation of the company when multiplied with the current share price. Also calculation of Earnings Per Share (EPS) formula requires the earnings of the company to be divided by the number of shares.