17 Oct
Issued and outstanding shares are two different measures of how many shares a company holds. Issued shares refer to all the stock a company has issued, while outstanding shares refer to the shares owned by investors after deducting the shares repurchased by the company. This article aims to shed light on what issued shares and outstanding shares mean and issued vs. outstanding shares.
Table of Contents
What Are Issued Shares?
The total shares issued by a company to shareholders or the general public are known as issued shares. These shares are distributed to investors in exchange for money to raise funds or as a reward to employees or suppliers. Shares kept in ‘treasury stocks‘ are included in issued shares. The company can use these for future sales or buying new business. An investor may sell their shares to another investor on the secondary market after the corporation has issued them once. To sum up, issued shares include both outstanding shares and treasury shares.
Issued shares = Shares Outstanding + Treasury Shares
What Are Outstanding Shares?
All corporation shares that have been approved, issued, and purchased by investors and are now held by them are referred to as outstanding shares. These are the total number of shares of a company’s stock bought by investors. Outstanding shares include all the shares owned by stockholders, investors, company officials, insiders, retail investors, etc., but do not include shares in treasury stock. Treasury stock means shares that are repurchased from shareholders, but the company didn’t retire those shares. The number of issued shares are shown on the company’s financial statements as capital stock or owners’ equity on the balance sheet.
To sum up, outstanding share includes total issued shares, excluding treasury shares.
Outstanding shares = Issued Shared – Treasury Shares
Issued vs. Outstanding Shares
| Basis of comparison | Issued Shares | Outstanding shares |
|---|---|---|
| Definition | Issued shares are a total number of shares created or issued by a company. It includes the shares repurchased by a company. | Outstanding shares are the number of shares owned by shareholders. It doesn't include the shares repurchased by a company. |
| Treasury shares | It includes the shares held in treasury, which are used for future sales or purchases of other businesses | It does not include treasury shares |
| Equation | Issued shares = outstanding shares + treasury shares | Outstanding shares = issued shares - treasury shares |
| Monetary flow | It provides monetary supply to the company | It does not provide any monetary support to the company |
| Financial statements | Issued shares are not reported on financial statements | Outstanding shares are reported on the balance sheet under owners equity |
| Voting power | It does not determine voting power | It determines voting power in the company for each shareholder and the total number of voting shares |
| Financial performance | They do not provide accurate information about the company's financial performance | They are useful in determining the financial performance of the company. For example, it is used to calculate earnings per share (EPS) |
Conclusion
Issued shares refer to all the stock a company has issued, while outstanding shares refer to the stock owned by investors. Issued shares increase when companies issue new stock or give employees stock options. Conversely, outstanding shares decrease when a company repurchases its stock and increase when a company pays dividends to shareholders.
Content writer at Invyce.com
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