Shares Authorized, Issued and Outstanding
The distinction between authorized, issued, and outstanding shares is important for investors because it affects the value of each share of stock. If a company has a large number of authorized shares but has only issued a small percentage of them, there is potential for the company to issue more shares in the future, which could dilute the value of existing shares. On the other hand, if a company has a low number of authorized shares and a high percentage of outstanding shares, the value of each share may be higher. Overall, understanding the number of authorized, issued, and outstanding shares can provide valuable insight into a company's capital structure and potential for future growth. Authorized shares refer to the maximum number of shares a company is allowed to issue. This number is determined by the company's charter and can be changed only with the approval of shareholders. Issued shares are the number of shares that a company has actually issued to shareholders. These shares may be held by insiders or by members of the public who have purchased them on a stock exchange. Outstanding shares are the number of shares that are currently held by investors, excluding shares that the company has repurchased or retired. This number is calculated by subtracting the treasury stock (shares repurchased by the company) from the issued shares.