Definition
Shares Issued refers to the number of shares a corporation has legally created and distributed to investors. These shares represent partial ownership in the company. The number of shares issued can influence the company’s stock price and is usually documented in the company’s balance sheet.
Key Takeaways
- Shares Issued refer to the total number of shares a company has legally issued to shareholders. These shares represent ownership in the company and can entitle the holder to a portion of the company’s capital, profits, or voting rights.
- Shares Issued can be purchased, sold, or transferred freely on the stock exchange, unless some restrictions have been specified in the company’s bylaws. The total number of issued shares influences a company’s market capitalization and earnings per share.
- Changes in the number of shares issued can signal the financial health of a company. An increase in shares issued, for instance through a stock split, can potentially dilute shareholder value but also may be an indicator of company growth. A decrease, on other hand, through a share buyback, can often increase the value of remaining shares, assuming company value remains stable.
Importance
The finance term ‘Shares Issued’ is essential as it represents the total amount of shares a corporation has legally authorized, distributed, and sold to shareholders.
These shares essentially denote a portion of the ownership of the company.
The number of shares issued significantly impacts the company’s equity capital, implying its overall capital structure and financial health.
It enables companies to raise capital for various operational, investment or debt servicing needs.
Moreover, knowing the number of issued shares is essential for calculating financial ratios like earnings per share (EPS) and price-to-earnings (P/E) ratio, which investors use to analyze a company’s profitability, market value, and financial performance against its competitors.
Explanation
Shares Issued, in the context of finance, refers to the total number of shares a corporation has officially authorized, issued, and purchased by investors. These are the shares that have been distributed to the public and are held by shareholders, whether they are individuals, institutions, or insiders of the company itself. The purpose of issuing shares is to raise capital for the corporation.
When such shares are issued, they represent the ownership interest in the company, and the shareholders essentially become part-owners of the company. The concept of Shares Issued is important and used in various ways. For instance, it plays a critical role in determining a company’s market capitalization, calculated by multiplying the share price by the number of issued shares.
It also affects the earnings per share (EPS), a key metric used by analysts to gauge profitability. Furthermore, the distribution of dividends is also based on the number of shares issued and held. Companies can also engage in activities like share buybacks, where they purchase their own issued shares to reduce the amount of outstanding stock, which, in turn, increases the value of shares remaining on the market.
Examples of Shares Issued
Facebook Inc. IPO: One of the most widely-known examples of shares issued is the Initial Public Offering (IPO) for Facebook Inc. The company issued shares to the public in May 2012, with an initial offering of2 million shares at a price of $38 each, raising approximately $16 billion, the third largest IPO in U.S history at the time.
Apple Inc. Share Issuance: Another example is Apple Inc., the tech giant. Apple issued its first shares to the public on December 12, 1980, offering6 million shares at a price of $22 per share. The company managed to raise just over $100 million through the IPO. Since then, the company’s shares have split multiple times and have significantly increased in value.
Google’s (Alphabet Inc) IPO: Google, now under Alphabet Inc., issued its first shares to the public on August 19,The shares were priced at $85 each, and the company offered just over 19 million shares, raising about $
67 billion. Unlike other companies, Google used a Dutch auction method to sell its shares, allowing individual investors to participate and not just institutional ones.
FAQ: Shares Issued
What are Shares Issued?
Shares issued refers to the number of shares a company has legally issued to investors. These shares represent the portion of ownership in the company.
How are Shares Issued?
Shares are issued through a process called an Initial Public Offering (IPO), where a company sells shares to public investors for the first time. After the IPO, the issued shares can be bought or sold in the stock market.
What is the difference between Shares Issued and Outstanding Shares?
Shares issued include all the shares that a company has ever issued while outstanding shares represent the total shares that are currently held by all shareholders. The number of outstanding shares decreases if the company buys back shares, also known as a share repurchase.
How do Shares Issued affect a company’s market capitalization?
A company’s market capitalization is calculated by multiplying the price of its stock by the number of shares issued. Therefore, the number of shares issued can significantly impact a company’s market capitalization.
What is the relationship between Shares Issued and Dividends?
Dividends are calculated based on the number of shares issued. When a company pays dividends, it distributes a portion of its earnings to shareholders. The amount each shareholder receives is directly proportional to the number of shares they hold.
Related Entrepreneurship Terms
- Equity Capital
- Initial Public Offering (IPO)
- Common Stock
- Authorized Shares
- Shareholder’s Equity
Sources for More Information
- Investopedia – A leading source of financial content on the web, ranging from market news to retirement strategies, investing education, insights from advisors, and more.
- Zacks Finance – Zacks is a well-known financial information services provider and often discusses topics such as shares issued.
- New York Stock Exchange (NYSE) – The NYSE is the largest equities-based exchange in the world, and offers numerous resources related to shares and IPOs.
- Nasdaq – Nasdaq offers real-time quotes, stock market news, market activity, and analysis related to shares and a variety of financial topics.
