Free Float Calculator
From shares outstanding and restricted shares, compute the freely tradable free-float shares and the free-float ratio.
Input Data
Results
At a glance:Free Float = shares outstanding − restricted shares; free-float ratio = free-float shares ÷ shares outstanding × 100%. Restricted shares are long-locked, non-tradable holdings (controlling shareholders, management, strategic investors, lock-up). Only the free float decides liquidity and volatility; a low free float means illiquidity, big swings and manipulation risk. It also sets the weight in free-float-adjusted indices (e.g. Hang Seng). Definitions of 'restricted' vary by compiler; free float shifts with lock-up expiry and insider trades — educational estimate only.
Formula
Free float shares = shares outstanding − restricted shares.
Free float ratio = free float shares ÷ shares outstanding × 100%.
$$\text{Free Float Shares} = \text{Shares Outstanding} - \text{Restricted Shares}$$$$\text{Free Float \%} = \dfrac{\text{Free Float Shares}}{\text{Shares Outstanding}} \times 100\%$$How to Use
- Enter total issued shares.
- Enter restricted (locked) shares.
- View the free-float shares and ratio.
At 10,000,000 shares outstanding, free float and ratio by restricted shares
| Restricted shares | Free float shares | Free float ratio | Liquidity |
|---|---|---|---|
| 4,000,000 | 6,000,000 | 60.00% | Adequate |
| 6,500,000 | 3,500,000 | 35.00% | Low |
| 8,500,000 | 1,500,000 | 15.00% | Tightly held, illiquid |
Same 10M issued: 4M restricted → 60% tradable; 8.5M restricted → only 15% tradable, where small trades move price sharply — higher volatility and manipulation risk.
Case Studies
Case 1: Compute the free float
Investor studies a firm: 10,000,000 issued, 4,000,000 locked by insiders; wants the tradable share.
Free float = 10,000,000 − 4,000,000 = 6,000,000; ratio = 6,000,000 ÷ 10,000,000 × 100% = 60%.
Interpretation: 60% trades freely, liquidity adequate — easier to find counterparties, price less distorted by a single block. Suitable for ordinary retail.
Case 2: The risk of low free float
Same firm but tightly held: 8,500,000 restricted → free float = 1,500,000, ratio only 15%.
From 60% to 15%, tradable shares collapse. Concentrated stock: illiquid (hard to fill large orders), volatile (small trades move price), easy to manipulate.
Notes: restricted-share definitions vary by compiler; free float shifts with lock-up expiry and insider trades; low-free-float stocks are riskier — check volume and ownership before entering. The Hang Seng uses free-float-adjusted weighting. Educational estimate only; pair with the stock and NAV calculators.
FAQ
Which shares count as restricted?
Long-locked, non-public shares: controlling shareholders and affiliates, directors and management, government/sovereign strategic stakes, other lock-up shares (e.g. post-IPO), and insider-held portions. They are 'issued' but not in daily trading. Index compilers set different thresholds (e.g. a holding % to qualify as strategic), so numbers may vary.
What does a low free-float ratio imply?
Low free float means few shares truly trade, hurting liquidity (hard to fill large orders), raising volatility (small trades move price) and easing manipulation (shell/pump-and-dump). Retail investors should be cautious with low-free-float stocks — check volume and ownership concentration.
How is free float linked to index weight?
Modern indices (e.g. Hang Seng) use free-float-adjusted market-cap weighting — weights use only the free-float market cap, not total market cap, so the index reflects what is actually investable and trackable by ETFs, avoiding over-weighting tightly held firms.
Why free-float-adjusted weighting, not total market cap?
Modern indices, including the Hang Seng, weight by free-float-adjusted market cap, not total. With total market cap, a huge firm 90% locked by insiders would get an outsized weight, but investors can only trade 10% — overstating its real influence and making ETF replication hard. Free-float adjustment uses only the tradable portion (free-float shares × price), excluding locked shares. Benefits: (1) reflects the actually investable market; (2) lets index ETFs buy enough to match weights; (3) limits a single controller's over-influence. Index compilers set a free-float factor and a weight cap per methodology. This calculator estimates free-float shares/ratio to help you read index constituents and weights.
Free float vs volume vs market cap — how to judge liquidity?
Three different lenses. Market cap = price × shares outstanding (total scale, includes all shares). Free float = tradable shares (the structural supply base). Volume = shares actually traded (activity). Free float is the potential tradable supply (upper bound); volume is the actual turnover. A stock may have decent free float but low volume if ignored; if free float is very low, volume can hardly grow and small trades swing price. To judge liquidity: (1) check free-float ratio (low <20-30% is a warning); (2) check volume/turnover (sparse trading = slippage risk); (3) check bid-ask spread (wide = costly); (4) with market cap for scale. Big cap + high free float + high volume = best liquidity; small cap + low free float + low volume = highest risk. Don't be lured by 'big cap' alone — what decides your ability to enter/exit and price stability is free float and actual volume. Pair with the stock and beta calculators.
Related Tools
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.