Issuing shares of common stock is one way a corporation can raise money to finance the company’s business activities. A corporation’s board of directors has the responsibility of deciding the amount of shares a company will issue. When a corporation forms, the articles of incorporation indicates the number of shares the business has the authorization to issue to potential investors. Outstanding shares are created when a company issues the stock without reacquiring the shares.
Identify the number of common stock shares issued by the corporation. A company can issue stock in exchange for cash and other assets, such as property and equipment. Corporations can issue shares to company insiders, employees and investors. You can find the number of shares issued by locating a company’s annual report or balance sheet. Also, many companies indicate the number of shares issued on their website.
Confirm the number of shares reacquired by the corporation. Treasury stock, or reacquired stock, is the term used to the stock a company buys back. A corporation can sell treasury stock to the public, to employees or company insiders at any time. Verify the number of treasury shares by viewing the company’s website or balance sheet. A company without treasury stock on its balance sheet does not have to account for reacquired shares.
Subtract treasury shares from issued shares to determine the total number of outstanding common stock shares. For example, a company with 5,000 shares of treasury stock and 15,000 issued common stock shares has 10,000 outstanding common shares.
Items you will need
- Annual Report
- Balance Sheet