What is the Difference Between Issued and Outstanding Shares?

The main difference between issued and outstanding shares lies in the number of shares a company has created and the number of shares held by shareholders. Here are the key differences:

1. Definition: Issued shares are the total number of shares created or issued by a company, including the shares repurchased by the company. Outstanding shares, on the other hand, are the number of shares owned by shareholders, excluding the shares repurchased by the company.
2. Treasury Shares: Issued shares include treasury shares, which are shares held in the company's treasury and purchased by investors but not yet retired by the company. Outstanding shares do not include treasury shares.
3. Financial Ratios and Market Capitalization: Outstanding shares are used to calculate financial ratios and market capitalization, as they represent the number of voting rights in the company and help find key financial metrics such as earnings per share (EPS).
4. Calculation: Outstanding shares can be calculated by subtracting the number of shares held in treasury from the number of issued shares. For example, if a company has 10,000 issued shares and 2,000 treasury shares, it would have 8,000 outstanding shares.
5. Significance for Investors: Outstanding shares are more important for financial analysts and investors, as they provide information about the company's ownership structure, voting rights, and financial performance.

In summary, issued shares represent the total number of shares a company has created, including treasury shares, while outstanding shares represent the number of shares held by shareholders, excluding treasury shares. Outstanding shares are more relevant for financial analysts and investors, as they provide crucial information about a company's ownership structure and financial performance.

Comparative Table: Issued vs Outstanding Shares

Here is a table highlighting the differences between issued and outstanding shares:

Issued shares refer to all the stock a company has issued, while outstanding shares refer to the stock owned by investors after deducting the shares repurchased by the company. The number of issued shares is recorded on a company's balance sheet as capital stock, or owners' equity, and are listed on the company's annual report. On the other hand, outstanding shares are used for calculating various financial ratios, like earnings per share (EPS).