In a stock split, a company exchanges its stock for more shares (in a forward split) or fewer shares (in a reverse split). The total number of shares in circulation increases or decreases according to the stock split’s exchange ratio. At the same time, the stock price is adjusted inversely to the exchange ratio, resulting in an increase or decrease. However, the overall market capitalization and value of the company remain unchanged. No, float—short for floating stock or floating shares—can’t be higher than https://www.bookstime.com/.

Similarly, companies may repurchase their own stock, reducing the outstanding share count. The number of shares outstanding formula consists of shares held by institutions, restricted shares held by company insiders, and shares available for investors to buy and sell on the open market. The number of shares outstanding increases when a company issues additional shares or when employees exercise stock options. Corporations raise money through an initial public offering (IPO) by exchanging equity stakes in the company for financing. An increase in the number of shares outstanding boosts liquidity but increases dilution. A company’s number of shares outstanding is used to calculate many widely used financial metrics.

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If all these warrants are activated, then XYZ will have to sell 100 shares from its treasury to the warrant holders. This section provides the sum of the total authorized shares, the total number of shares outstanding, and the total floating shares. Knowing the number of outstanding shares is important for determining a company’s market capitalization (market cap), which measures a company’s total value. Market cap is the total value of all the company’s outstanding stock, or the total number of outstanding shares times the current stock price. Investors use market cap to categorize companies into large-cap, mid-cap and small-cap companies, which can help guide investors looking to diversify their investments. Outstanding shares are all the shares issued and sold by a company that are not held by the company itself.

The stock exchange the company trades on will also report the number of outstanding shares. Authorized shares represent the maximum number of shares a company can issue. A company may authorize 5 million shares for an initial public offering, but only sell 4 million shares.