# What is weighted average outstanding shares?

## What is weighted average outstanding shares?

What is Weighted Average Shares Outstanding? Weighted average shares outstanding refers to the number of shares of a company calculated after adjusting for changes in the share capital over a reporting period. The EPS formula indicates a company’s ability to produce net profits for common shareholders.

## How are weighted average shares calculated?

The investor can calculate a weighted average of the share price paid for the shares. In order to do so, multiply the number of shares acquired at each price by that price, add those values and then divide the total value by the total number of shares.

What effect do share dividends or share splits have on the computation of the weighted average ordinary shares outstanding?

What effect do stock dividends or stock splits have on the computation of the weighted average number of shares outstanding? The computation of the weighted-average number of shares outstanding requires restatement of the shares outstanding before the stock dividend or split.

### How many shares will be outstanding after the split?

For example, in a 2-for-1 stock split, an additional share is given for each share held by a shareholder. So, if a company had 10 million shares outstanding before the split, it will have 20 million shares outstanding after a 2-for-1 split.

### What is the weighted average number of shares?

The weighted average number of shares is calculated by taking the number of outstanding shares and multiplying the portion of the reporting period those shares covered, doing this for each portion and, finally, summing the total. The weighted average number of outstanding shares in our example would be 150,000 shares.

What is a 5% stock dividend?

A stock dividend is a dividend payment to shareholders that is made in shares rather than as cash. For example, a company might issue a stock dividend of 5%, which will require it to issue 0.05 shares for every share owned by existing shareholders, so the owner of 100 shares would receive five additional shares.

#### How do you find the average number of common shares outstanding?

Obtain the total value of all shares within a company’s stock. Divide the total value by the total number of shareholders to to find the average outstanding share. For instance, if a company’s total stock value is \$2,000,000 and there are 2,000 shareholders, the average outstanding share is \$1,000.

#### What is a 5 for 4 stock split?

A literal five-to-four stock split occurs when a company announces that it will convert five shares of outstanding stock to four shares. Reverse stock splits operate in the other direction, in that a four-to-five reverse stock split means the company will convert four shares of outstanding stock to five shares.

What does it mean to have weighted average shares?

The weighted average shares outstanding, or the weighted average of outstanding shares, is a calculation that takes into consideration any changes in the number of outstanding shares over a specific reporting period. Investors, when investing for the long term, often compile a position in a stock over several years.

## How are weighted average shares used to calculate EPs?

EPS = (Net Income of the Company – Dividend Paid to Preference Shareholders) / Weighted Average Shares Outstanding for the Said Period When calculating EPS, taking into consideration only the number of common shares outstanding at a period’s end would represent a skewed version of earnings, thus distorting a company’s outlook.

## How does share repurchase affect weighted average share outstanding?

The repurchase of shares reduces the common share count. Weight the shares outstanding by the portion of the year between this change and next change: weight = days outstanding / 365 = months outstanding / 12 Let us consider the following example and incorporate various scenarios that can affect the weighted average number of shares outstanding.

How are shares split in a stock split?

Stock Split Stock split, also known as share split, is the process by which companies divide their existing outstanding shares into multiple shares, such as 3 shares for every 1 owned, 2 shares for every 1 held, and so on.