Shares represent a part of the ownership of a company. When you purchase shares, you become a shareholder with a stake in the company’s assets and profits. But how do you calculate how many shares are available, their value, or your percentage of ownership? In this article, we will delve into the process of calculating shares to help investors make informed decisions.

1. Understanding Total Available Shares

To begin, it is crucial to understand the total number of shares a company issues—also known as total outstanding shares. This figure can usually be found in the company’s financial statements or annual reports. Publicly traded companies are required to disclose this information for potential investors and analysts.

2. Calculating Share Value

The value of a share is another important aspect when evaluating investment options. Here’s how you can calculate it:

Market Value: The market value per share is calculated by dividing the company’s market capitalization (current share price multiplied by outstanding shares) by the total number of outstanding shares.

Book Value: On the other hand, the book value per share is determined by taking the company’s net assets (assets minus liabilities) and dividing this number by outstanding shares.

3. Determining Ownership Percentage

Knowing your level of ownership in a company can be helpful in understanding your role as an investor and making strategic investment decisions. To calculate your ownership percentage, divide the number of shares you own by the total available shares:

Ownership Percentage = (Your Shares / Total Outstanding Shares) x 100

4. Evaluating Weighted Average Shares Outstanding

For potential investors and shareholders who need to track earnings per share (EPS), it is essential to know about weighted average shares outstanding (WASO). WASO refers to an average that considers any changes in the number of outstanding shares over a given period. To calculate WASO:

– Determine outstanding shares at the beginning and end of each period

– Identify any changes in outstanding shares due to stock transactions (e.g., buybacks or splits)

– Add these figures together and divide by the total number of periods considered

5. Analyzing Dividend Distribution

If a company issues dividends, it is important to understand how it affects shareholders. Dividends per share (DPS) determine the portion of profits that shareholders receive for every share they own.

Dividend Per Share = Total Dividends Paid / Total Outstanding Shares

Conclusion

Calculating shares is an essential skill set for investors in their financial journey. By understanding the total available shares, share values, ownership percentage, weighted average shares outstanding, and dividend distribution, you can make informed decisions on investments and track your investment’s progress over time.