When you decide to invest in stocks You need to analyze the stock market. The analysis process can be done by calculating the number of shares in circulation.
The aim of calculating outstanding shares is to maximize profit and minimize the risk of loss. Therefore, it is necessary to have an insight into the market conditions based on available data.
So how to calculate outstanding shares? What is the benefit of knowing the number of shares remaining? To answer these questions Let’s get into more complete information in the discussion below!
What is the outstanding number of shares?
The number of outstanding shares is the number of investment instruments of an issuer or company that is already owned by a party or issued by a certain institution. Simply put, this is the total number of investment instruments of an issuer. that is owned by either party Whether it is a person or an institution
The number of outstanding shares of a public company listed on BEI (Indonesia Stock Exchange) is the total number of shares registered by the company during its initial public offering (IPO). The number of shares also includes other shares. issued when the company issues new shares (Rights issues–
in order to see the picture more clearly Let’s take the following example: For example, there is Company B owned by Agung. This company has a registered capital of 300 million IDR and consists of 1,000 shares.
After calculation The value of each share per lot is IDR 300,000.00, obtained from IDR 300 million divided by 1,000 shares. Therefore, Agung decides to buy 800 shares worth approximately IDR 240 million. This nominal value of IDR 240 million is called the number of shares. that are already on sale Because Agung is already the owner.
Meanwhile, the remaining 200 shares that are not owned are called portfolio shares. Agung’s company can use the remaining shares as additional equity at any time.
Types of circulating stocks
It turns out that circulating stocks are also divided into several types according to status or function. Let’s look at the types of circulating stocks in the description below:
1. Floating stocks
Floating stocks It is a prominent type of stock that is traded on the stock exchange. These types of stocks are basically the same as common stocks or stocks circulating in the market.
It’s just Floating stocks It is operated by a private company that will be offered for sale at an IPO. In an IPO, a company becomes an open issuer of shares that anyone can purchase. can buy shares
2. Preference shares
Preferred shares It is a combination of common stocks and bonds circulating on a stock exchange. The difference from ordinary shares is the interest rate that will be received. It may be that the profits are higher than common stocks.
Not only that Owners of preferred shares have the right to redeem them. This right of redemption allows you to exchange preferred shares for common shares.
3. Issued shares
The next type of outstanding shares is known as “shares outstanding”. Issued shares– The purpose of this type of share is to obtain capital that can be given to directors or employees of the company.
In other words, these stocks are suitable for purchase by companies looking to compensate their employees.
Benefits of knowing the number of shares outstanding
Knowing the number of shares in circulation can be very helpful for investors as described below:
1. Calculation of net income per share
As an investor Of course, you need to calculate and know the net profit you will receive. This is where information about different number of shares is used to find earnings per share (EPS), book value per share. and dividend per share (DPS)
This information will guide you to make the best decisions in the world of stock investing.
2. Calculation of market value of securities of issuers/companies
Market capitalization is the result of multiplying the current stock price and the number of outstanding shares. The aim is to find the total value of the company/issuer in the market.
The calculated market capitalization provides information about a company’s valuation. Is the company a high risk or an opportunity?
3. Basic stock analysis using several calculation methods.
The number of shares outstanding is also useful as a basis for calculation in stock analysis. There are several calculation methods you can use, such as price-to-book value (PBV), price-to-earnings ratio (PER), and price-to-earnings growth ratio (PEG).
Method for calculating the number of shares outstanding
How to calculate the number of shares sold can be done using several formulas as follows:
- Formula 1: Number of outstanding shares = Expanded shares + Restricted shares
- Formula 2: Number of shares sold = Shares issued – Shares repurchased
- Formula 3: Number of outstanding shares = Official shares – Treasury shares
Company
Number of shares sold = Authorized shares – Treasury shares
Number of shares sold = 8,000 – 1,000
Number of shares sold = 7,000
Therefore, the number of outstanding shares of Company A is approximately 6,000 shares.
That is an overview of the number of shares in circulation. Starting from understanding to how to calculate. Understand the calculation of outstanding shares in depth so you can experience the benefits in the world of investing.
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