The Weighted Average Shares Outstanding is a calculation that takes into account any changes in the number of shares of a company during a specific period. It is used in financial calculations, such as earnings per share (EPS), to provide a more accurate picture of a company's financial performance.
The Weighted Average Shares Outstanding is a more nuanced way to calculate the number of shares a company has during a specific period. It considers the timing of share issuance or repurchase, which is essential in computing earnings per share, a critical metric of a company's profitability.
Calculating the weighted average shares outstanding involves adding the number of shares at the beginning of the period to the product of the number of shares issued or repurchased and the fraction of the period they were outstanding. The result is an average that reflects changes in share count over time.
This calculation provides a more accurate measure of a company's EPS, which is crucial for investors when assessing a company's profitability and determining the company's share price.
Walmart Inc. issues additional shares during the fiscal year to fund acquisitions or to offer stock-based compensation to its employees. The company calculates its weighted average shares outstanding to determine the EPS and provide a true picture of its profitability to the investors.
Microsoft Corporation might repurchase its own shares during the fiscal year to return capital to shareholders and increase its EPS. It calculates the weighted average shares outstanding to reflect these changes in the EPS calculation.
For Tesla Inc., the number of shares can change due to the issuance of new shares to fund expansion or due to stock splits. The company calculates the weighted average shares outstanding to provide a more accurate EPS, which is essential for investor decisions.