Term: AVERAGE NUMBER OF SHARES IN ISSUE

Certain statistics for listed companies on the JSE are given in the form of “per share” data – such as earnings per share and dividends per share. These ratios rely on the number of shares in issue for their calculation. However, most listed companies change the number of shares which they have in issue constantly. This is because they issue new shares to raise additional cash, or as part of an acquisition deal, or they have an employee share incentive scheme which requires them to constantly give shares to their staff to incentivise them, or they do a share buy-back, a share split or a consolidation. Any of these activities will change the number of shares in issue during the financial year. For this reason, they calculate the average number of shares in issue and base certain of their “per share” figures on that. For example, earning per share makes the assumption that the profits of the company were earned evenly throughout the financial year – so if there was an issue of shares after six months of the year that would change the average number of shares in issue over the entire year. For example, if the company began the year with 10m shares and then issued another 5m shares after six month, the average number of shares in issue for the whole year would be 12,5m – even though they would have had 15m shares in issue at the end of the year.

All information and data contained within the PDSnet Glossary terms is for informational and educational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet glossary terms is based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any glossary term for any reason.« Back to Glossary Index