Search
Close this search box.

Table of Contents

Issued Shares



Definition

Issued shares refer to the number of shares a corporation has legally distributed to investors. These can include both common and preferred shares that a company has sold (both to the public and privately) but does not necessarily include shares that are repurchased as treasury shares. It’s a key component in calculations of market capitalization and earnings per share.

Phonetic

The phonetic pronunciation for “Issued Shares” is: “ih-shood shairs”

Key Takeaways

<ol> <li>Issued Shares Definition: Issued shares are the authorized shares that are sold and held by shareholders. These shares represent ownership in a corporation and can be common shares or preferred shares. They have the right to receive dividends and vote in the corporation’s decisions.</li> <li>Issued Shares vs Authorised Shares: Born out of authorized shares, issued shares are those that are allocated to and held by the shareholders, while authorized shares are the maximum number of shares that a corporation can issue as set in its corporate charter. The number of issued shares can be less or equal to the number of authorized shares, but it cannot exceed it.</li> <li>Issued Shares and Stockholder Equity: The number of issued shares is significant in determining stockholder equity, along with retained earnings and additional paid-in capital. Stockholder’s equity is computed by subtracting total liabilities from total assets of the company, and part of it is derived from the issued shares of stock.</li></ol>

Importance

Issued shares are crucial in the world of business and finance because they represent the actual number of shares a company has sold and dispersed to investors. This number is significant as it’s one of the key components in calculating important financial ratios like earnings per share (EPS) and cash flow per share. They can also aid in determining a company’s market capitalization. Additionally, by comparing the number of issued shares to authorized shares, investors and analysts can gain insights into a company’s future fundraising prospects. Therefore, the concept of issued shares is central to understanding a firm’s financial health, market value, and potential for growth.

Explanation

Issued shares are an important cornerstone in the capital structure of a corporation as they are used as a way for the corporation to raise capital. When a company decides to raise money, it does so by selling parts of its ownership in the form of shares. These shares are “issued” to investors who choose to buy them. The capital raised can then be used by the company for various purposes, like starting new projects, paying off debt, or reinvesting in the business. Having more shares issued can help a company fund its short or long-term needs without taking on additional debt, hence preserving the company’s balance sheet. On the investor side, these issued shares signify a portion of ownership in the company. People who buy issued shares are purchasing a piece of the company, making them shareholders with certain rights, such as the right to vote on company policy and receive a portion of the company’s profits in the form of dividends. Therefore, issued shares can serve the dual purpose of raising capital for the company and providing an investment opportunity for people interested in sharing in the company’s potential future profits.

Examples

1. Apple Inc.: As of 2021, Apple Inc. has approximately 16.69 billion issued shares. These shares represent the total amount the company has released for purchase by the public. The company utilizes funds from these issued shares for various corporate activities. Over time, the total number of issued shares may change due to stock splits or other corporate actions.2. Amazon.com Inc.: As a global E-commerce giant, Amazon has issued shares to fuel its growth and expansion. As of 2021, the company has approximately 504 million issued shares. These shares are traded publicly on NASDAQ. The proceeds from these issued shares have helped Amazon grow from an online bookstore to a multinational tech company.3. Tesla, Inc.: Tesla, led by Elon Musk, has also issued shares as a strategy to raise capital. With approximately 963 million issued shares as of 2021, Tesla has funded research and development, production, and expansion of their electric vehicles and renewable energy products. The issuance of shares also allowed for the company’s inclusion in the S&P 500, signaling its growth and market influence.

Frequently Asked Questions(FAQ)

What are Issued Shares?

Issued shares refer to the portion of a company’s shares that have been authorized, issued and purchased by investors. These shares represent the ownership of the company and could be available for the public or kept as treasury shares.

How do issued shares differ from authorized shares?

Authorized shares refer to the maximum number of shares that a company is allowed to issue, as stated in the company’s articles of incorporation. On the other hand, issued shares are those that have actually been issued and are held by investors. Not all authorized shares are necessarily issued.

What is the significance of issued shares?

Issued shares are important as they represent the extent of the company’s ownership that has been distributed among investors. It tells about the distribution of equity in a business and potentially affects control and dividend distribution.

Can the number of issued shares change over time?

Yes. A company can issue more of its authorized shares at any time, given it abides by regulation and its shareholders approve the action. This can be done to raise additional capital. Alternatively, a company can also buy back its issued shares, reducing the number in circulation.

How are issued shares recorded on a company’s balance sheet?

Issued shares are recorded in the shareholder’s equity section of a company’s balance sheet. They are typically listed at their par value, with any amount received above this value recorded as additional paid-in capital.

Are issued shares an indicator of a company’s value?

Yes and no. While the number of issued shares can give insight into the spread of a company’s ownership, it does not directly reflect its overall market value. The value of the company is more accurately reflected by the company’s market capitalization, which is calculated by multiplying the current stock price by the total number of issued shares.

Can issued shares be unissued?

Yes. Shares can be unissued if a company decides to buy them back. They become treasury shares and the company can decide to reissue them in the future.

Related Finance Terms

Sources for More Information


About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More