Personal Finance & Money Asked on December 7, 2020
Recently, I check Facebook information about shares as below:
Facebook balance sheet
According to the definition, the common stock equation is represented as :
Number of Outstanding Shares = Number of Issued Shares – Treasury Stocks
But why on the Facebook balance sheet, the number of issued shares fluctuated very small while common stock equity has high volatility? How common stock equity is determined? is it included the stocks owned by the public?
Common stock equity is the value of those shares. The number of shares outstanding typically doesn't change very much. It is only affected by new issuances (rare), buybacks (slightly less rare) and stock compensation awards (common but relatively small).
The value of those shares however, changes as the company makes money (among other things). Obviously a profitable company like Facebook (at least now) can have very large changes in equity without changing the number of outstanding shares significantly.
Also note that the number you cite is the book value of the equity of Facebook - it is very different that the market value of that equity, which is determined by the market price of Facebook stock.
Answered by D Stanley on December 7, 2020
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