Question

What are the advantages of lower number of shares outstanding ?

Answer 1

There can be a couple of ways to identify the shares outstanding. Comprehensively, an investor might look at the shareholders’ equity on the firm’s balance sheet to identify a company’s shares outstanding. Shareholders’ equity will typically provide the total authorized shares, the total outstanding shares, and the float shares. Additionally, many data providers report a company’s market capitalization daily which can be divided by its share price to identify an outstanding share count.

Issuing common stock in the financial markets is an alternative to issuing debt. Rather than adding more debt to a company's balance sheet, which is a financial statement, and budgeting for the servicing of debt, a company can take a less expensive route and issue common stock. With stock, an organization does not need to make obligatory interest payments to investors and instead can make discretionary dividend payments when it has extra cash.