In computer science, a float is a data type composed of a number that is not an integer, because it includes a fraction represented in decimal form. A float is a floating-point number, which means it is a number that has a decimal place. Floats are used when more precision is needed.
In finance, the term float refers to money within the banking system that is briefly counted twice due to time gaps in registering a deposit or withdrawal. These time gaps are usually due to delays in processing, and the float is essentially double-counted money that appears simultaneously in the accounts of the payer and the payee. Individuals and companies can use float to their advantage, gaining time or earning interest before payment clears their bank. However, playing with float can spill into the realm of wire fraud or mail fraud if it involves the use of others funds.
On the other hand, a companys float refers to the regular shares that a company has issued to the public that are available for investors to trade. This figure is derived by taking a companys outstanding shares and subtracting any restricted stock. A companys float is an important number for investors because it indicates how many shares are actually available to be bought and sold by the general investing public. Only changes that affect the number of shares available for trade change the float, not secondary market transactions, nor the creation or trading of stock options.
