How much of a company do you own when you buy shares?

Fsp Invest, 21 Jan. 2014

Tags: company, shares, part owner, ownership, percentage of ownership, investing, investor, buying shares,

You’ve done your research and have decided which company you’re going to invest in on the Johannesburg Stock Exchange. When you buy shares in a company, you become a part owner in it. But how much of the company do you actually own? Read on to find out how to calculate what percentage is yours…

So you’ve made the decision, you want to own shares in a company, Gareth Stokes in Fear, Greed and the Stock Market explains…

Imagine you’ve heard about a fantastic information technology (IT) company that manufactures smart TVs.

You love the technology that Fantastic Television Limited is involved in. You’ve studied the company from top to bottom. Every measure you’ve applied points to the company being a sensible buy...

So you phone your stockbroker and buy 100,000 shares in the company. The minute you complete the transaction you become a part owner of Fantastic Television Limited.

But how much of the company is yours?

To calculate how much of the company you own, you’d have to find out what the total number of issued shares is.

Let’s say Fantastic Television Limited has 25 million shares in issue. By simply dividing your 100,000 shares into the 25 million issued shares, you can calculate your percentage ownership in the company.

So in this case you’ve purchased 0.4% ((100,000/25,000,000) x 100) of the company! It doesn’t sound like much, but it’s the first step on the road to bigger things.

You now share in 0.4% of Fantastic Television’s profits. But, of course, the management of the company still exercises discretion when it comes to paying over these earnings.

So there you have it, how to calculate the percentage of a company you own.

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