Indigo Corporation Weighted-Average Shares Outstanding Calculation
How is the weighted-average number of shares outstanding calculated for 2020?
What were the key events that influenced the total number of shares outstanding for Indigo Corporation in 2020?
Calculation of Weighted-Average Shares Outstanding:
The weighted-average number of shares outstanding for 2020 is 207,232 shares. Indigo's weighted-average number of shares outstanding for 2020 is as follows:
There are 2 different shares outstanding throughout the year. 141,600 shares were outstanding from January 1 to April 30 (121 days). Then 48,000 new shares were issued on May 1, bringing the total number of shares outstanding to 189,600.
There are 3 different shares outstanding after May 1. 141,600 shares were outstanding from January 1 to April 30 (121 days). 48,000 shares were outstanding from May 1 to June 30 (61 days). Then 139,200 shares were outstanding from July 1 to September 30 (92 days). On July 1, Indigo purchased 9,600 treasury shares, which were reissued on October 1. Thus, the number of shares outstanding increased to 148,800 on October 1.
There are 2 different shares outstanding throughout the year. 141,600 shares were outstanding from January 1 to April 30 (121 days). 48,000 shares were outstanding from May 1 to June 30 (61 days). Then 148,800 shares were outstanding from July 1 to December 31 (184 days).
Therefore, the weighted average number of shares outstanding is computed as:
(141,600 x 121 days) + (48,000 x 61 days) + (139,200 x 92 days) + (148,800 x 184 days) = 41,446,400. So, the weighted-average number of shares outstanding for 2020 is 207,232 shares.
Explanation:
Calculating the weighted-average number of shares outstanding is crucial for understanding the impact of various events on a company's overall ownership structure. In the case of Indigo Corporation in 2020, the issuance of new shares, purchase of treasury shares, and reissuance of those treasury shares all played a role in determining the weighted-average number of shares outstanding.
By considering the different periods during which shares were outstanding and the corresponding number of days, the calculation takes into account the varying levels of ownership throughout the year. This calculation method provides a more accurate representation of the company's diluted shares outstanding.
Understanding the weighted-average number of shares outstanding is essential for financial analysis, as it impacts metrics such as earnings per share and market capitalization. Investors and analysts use this information to evaluate a company's performance and potential for future growth.
By following the specific events and timeline of shares outstanding, companies like Indigo Corporation can provide a comprehensive view of their ownership structure and better communicate their financial position to stakeholders.