Quarterly and annual reports provide an ongoing record of a company’s financial health. The reports are filed with the Securities and Exchange Commission (SEC) and are available on the SEC’s website. Stock data, including the number of authorized shares and something called "float," reflects the market’s sentiment about the company. Unlocking this information can help you decide if the time is right to go long, sell short or stay on the sidelines.
The total stock shares a company is legally allow to sell to the public is known as authorized stock. Privately held companies as well as those destined for public trading must list the number and type of shares in their articles of incorporation, which is also known as a charter. The articles of incorporation are filed with the incorporating state. The company must provide the stock information to the SEC before the stock can be sold privately or publicly.
The total number of common stock shares that have been issued or purchased are the shares outstanding, which is also known as issued stock or stock outstanding. Shares that have been given to the business owners, the board of directors and family members is known as restricted stock. Large companies can have millions of their stock shares traded daily. The shares outstanding is listed on a company’s balance sheet as “Capital Stock.” The stock is counted as outstanding until the shareholder sells the shares or the company buys them back.
The float is the number of shares that are available for daily trading on the stock exchanges. The float does not include restricted stock shares. Small float stocks are more volatile because of their limited number of shares available for trading. The price will react quickly if an investor buys or sells a large number of shares. By virtue of their size, large float stock prices remain relatively unchanged by large share trading. A company can reduce the float by buying back their shares on the open market.
You can keep track of any fluctuations in the shares outstanding through daily calculations. Subtract the number of issued shares from the authorized shares to get the number of shares outstanding. For example, if XYZ company has 100,000 authorized shares, subtract the 75,000 issued shares to get the number of shares outstanding, which is 25,000.
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