What is Free-Float Factor?-(#Complete Guide)

What is Free-Float Factor?-(#Complete Guide)

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

Free float factor 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

Example of Free Float Factor

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.

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