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The number of shares of common stock outstanding is a metric that tells us how many shares of a company are currently owned by investors. This can often be found in a company's financial statements, but is not always readily available -- rather, you may see terms like "issued shares" and "treasury shares" instead. Besides, it can be helpful to understand where the numbers you're looking at came from.
Here's what you need to know about the different share counts that publicly traded companies use, as well as how you can calculate the number of outstanding common shares. You can often find some of this information at your broker's website.
When examining a company's financials, or reading analysis about a stock, you may come across several different terms describing the number of shares of stock that exist for a company. These include:
Of these terms, the two that you need in order to determine the number of outstanding shares are issued shares and treasury shares. Because issued shares refers to the total number of shares a company has created, and treasury shares refers to shares that have been issued but bought back, subtracting these two numbers results in the number of outstanding shares. Generally, both of these figures can be found on a company's balance sheet.
Outstanding shares = Issued shares - Treasury shares
As a real-world example, here is some information from Johnson & Johnson's (JNJ -0.93%) 2014 year-end balance sheet. The company has 4.32 billion authorized common shares, of which 3,119,843,000 have been issued as of December 31, 2014. Next, 336,620,000 shares were held in the company's treasury at that time, so subtracting this from the number of issued shares means that Johnson & Johnson had 2,783,223,000 outstanding shares at the end of 2014.
