The number of authorized and issued shares may be the same or different, in which case there would be more authorized than issued shares. First, the board of directors authorizes the company to issue a certain number of shares. The company hasn’t taken action yet; it’s just gotten approval to take action and sell some shares if it chooses to. As an example, let’s say that a fictional business, the Helpful Fool Company, has authorized 5,000 shares.

Shares Outstanding Vs. Treasury Shares

Companies typically use reverse splits to increase their share price to meet minimum exchange listing requirements. Although this decreases liquidity due to fewer shares, it can deter short sellers by making it harder to borrow shares for short selling. As noted above, outstanding shares are used to determine very important financial metrics for public companies.

Shares Outstanding vs. Floating Stock: An Overview

The profit and loss statements in nearly every corporate earnings press release will include both basic and diluted shares outstanding. Alternatively, the total number of shares outstanding can be easily calculated as a company’s market capitalization divided by the current share price. Typically, a stock split occurs when a company is aiming to reduce the price of its shares. When this takes place, a company’s outstanding shares increase, and a higher degree of liquidity results. By contrast, a reverse stock split occurs when a company seeks to elevate its share price. Often, a company does this to meet listing requirements, which often require a minimum share price.

Issued Shares vs. Outstanding Shares

At the time, GE discussed plans to split into three companies and to divest from many businesses. They determined that reducing their share count from nearly 8.8 billion to roughly 1.1 billion better aligned with this vision (1). The first of these, unrestricted shares, is also known as “the float.” These are the shares that can be actively traded on the open market. Shares outstanding are the basis of several key financial metrics and can be useful for tracking a company’s operating performance. The number of shares outstanding of a company can be found in its quarterly or annual filings (10-Qs or 10-Ks). Learn about stocks that will split in 2024 and why a company might decide to do a stock split.

How to Derive Outstanding Shares

And if these instruments are in the money, they represent current ownership of the company, even if technically the shares underlying the options, warrants or debt haven’t yet been issued. If there is a difference between the number of shares issued and outstanding, the difference is treasury stock. In other words, a company has issued how to find shares outstanding shares and then bought some of the shares back, leaving a reduced number of shares that is currently outstanding. John, as an investor, would like to calculate the company’s market capitalization and its earnings per share. The number of outstanding shares is calculated by subtracting treasury stock from the shares issued.

These types of investors typically include officers, directors, and company foundations. The purpose of the repurchase can also be to eliminate the shareholder dilution that will occur from future ESOs or equity grants. If a company considers its stock to be undervalued, it has the option to institute a repurchase program. In particular, when a company issues stock that has a par value, the balance sheet will typically have numbers you can use to calculate issued shares. Simply using the number of shares outstanding at the end of the reporting period might give a distorted picture of the company. Imagine a situation where the company exercises a share buyback at the end of the year.

• If all these warrants are activated, then XYZ will have to sell 100 shares from its treasury to the warrant holders.
• Stock options will be exercised; restricted stock may vest after executives hit certain targets.
• Before their availability on the secondary market, shares are authorized, issued, and, finally, purchased by investors who became equity owners or shareholders of the issuing company.
• Besides, it can be helpful to understand where the numbers you’re looking at came from.
• These shares are any authorized shares, excluding treasury stock, held or sold to a corporation’s shareholders.

The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Assuming all option holders exercise, Company A would issue 10 million shares. With the $50 million in cash, in theory it could instantly repurchase 5 million shares at $10 each. Obviously, those option holders in theory could exercise their options to create new shares.

For this reason, the SEC requires all public companies to report their outstanding shares in their filings to the SEC, which is public information. The image below shows a section of Apple’s (AAPL 0.46%) balance sheet from 2016 through 2020. The second line from the bottom indicates the number of shares outstanding at the end of each fiscal year, and the bottom line indicates how many new shares were issued by Apple in that year. Total shares outstanding decreased from more than 21 billion in 2016 to less than 17 billion in 2020. The tech company spent billions buying back its stock during these years.

The company now has 5,000 authorized shares, 2,000 issued, 500 in treasury stock, and 1,500 outstanding. The outstanding stock is equal to the issued stock minus the treasury stock. Helpful https://www.bookstime.com/ Fool Company’s board has elected to issue just 2,000 shares at this time. Therefore, the company currently has authorized 5,000 shares and has 2,000 shares issued and outstanding.

• The category does not include treasury stock, which is the company’s own stock held by the company.
• For example, if the company has 300,000 shares outstanding and grants a 2 percent stock dividend, multiply 300,000 by 0.02 to find that 6,000 new shares have been issued.
• Essentially, treasury shares are the portion of the shares that a firm keeps in its treasury.
• Companies typically use reverse splits to increase their share price to meet minimum exchange listing requirements.
• At the same time, the stock price is adjusted inversely to the exchange ratio, resulting in an increase or decrease.
• Generally, you won’t need to calculate this number yourself and it will be listed for you on a company’s 10-Q or 10-K filing.

Issued Shares: Definition, Example, Vs. Outstanding Shares

Stocks that have a smaller float are generally more volatile than stocks with a larger float due to their limited availability. Investors may demand more shares than are available, resulting in the price of the shares increasing. In this scenario, the company is trying to create an appearance of rapid growth in earnings per share to appear like a solid investment opportunity. A widely held opinion is that when these companies are repurchasing shares, they tend to do it when they have a lot of cash. This usually means that they are performing well and have been having success.