Equity Analysis: Weighted Average Number of Shares

The weighted average number of shares is the number of outstanding shares multiplied by the percentage of the reporting period for which that number applies. The figure is used in the calculation of many financial ratios such as earnings per share. Here we look at how to calculate the weighted average number of shares and discover how the number is affected by share buybacks. We also explore the effect of a change in weighted average number of shares on company value, P/E, and dividend yield.