In this guide you will learn about Free Float Factor in detail.
Let us start
What is Free Float Factor?
The free float is used for calculating the Free-float market capitalization of a company.
It shows No of Shares are available for Public Trading.
A Free-float factor of say 0.55 means that only 55% of the total shares are available for public trading.
Formula
Non-Free Float Share Category :
- Shareholding of promoter and promoter group
- Government holding in the capacity of a strategic investor
- Shares held by promoters through ADR/GDRs.
- Strategic stakes by corporate bodies
- Investments under FDI category
- Equity held by associate/group companies (cross-holdings)
- Employee Welfare Trusts
- Shares under lock-in category
Example
For company ABC Ltd
Free Float Factor=Total Share – Non Free Float share
=100-48.44
=51%
Here figure shows that 51% of the total shares are available for public trading
When we multiply with total share, we will get No.of share available for public trading.
=2,50,00,000*0.51
=1,27,50,000.
