The key difference between issued vs. outstanding shares is that Issue shares are the total shares that the company issues to raise funds. At the same time, outstanding shares are the shares available with the shareholders at the given time after excluding the shares bought back.
- Issued shares are the shares that a company issues. Its shareholders and investors hold these shares. The company issues these to the people in the Company or the general public and some large investment institutions.
- Outstanding shares are Issued shares minus the stock in the treasury. When a company buys back its shares and does not retire them, they are said to place in the treasury. Thus, after subtracting such shares in the treasury, the remaining are said to be outstanding shares. We use the number of outstanding shares for calculating various financial ratios, like the Earnings per share (EPS).
The Outstanding shares are less than or equal to Issued shares. These cannot be more than issued shares but can be equivalent to them if there is no treasury stock.
Outstanding shares = Issued shares – Treasury stock
Table of contents
- Difference Between Issued vs. Outstanding Shares
- Example of Issued and Outstanding Share
- Issued vs. Outstanding Shares Infographics
- Issued vs. Outstanding Shares–Key Differences
- Issued vs. Outstanding Shares Head to Head Difference
- Conclusion
- Recommended Articles
Let us consider an example to understand it better. Company XYZ Inc. has 50,000 issued shares. It buys back 2,000 shares and does not retire them, i.e., the Company will hold them as treasury stock. What is the number of outstanding shares?
As we know, outstanding shares are issued shares minus the treasury stock i.e.
- Outstanding shares = Issued shares – Treasury stock
- Thus, outstanding shares = 50000 – 2000 = 48,000
Here we provide you with the top 6 differences between Issued vs. Outstanding Shares.
The critical differences between Issued vs. Outstanding Shares are as follows –
- Issued shares are the total shares issued by the Company. Whereas outstanding shares are the shares with the shareholders, i.e., it does not include the shares repurchased by the Company. Thus, subtracting treasury shares from the issued shares will give outstanding shares.
- Issued shares include shares held in treasury. A Company can use these for future sales or purchase some other business. In contrast, outstanding shares do not include treasury stock.
- The financial statements don’t report Issued shares. In comparison, Financial statements don’t report outstanding shares.
- Outstanding shares help determine the voting power in the Company for each shareholder and the total number of voting shares.
- The Outstanding Shares are useful to know the company's financial performance per share. E.g., to calculate earnings per share EPS, the earnings are divided by outstanding shares and not the issued shares.
- Outstanding shares are less than or equal to issued shares. They are mostly less than the issued shares except for the Companies which do not have treasury stock. In the latter case, the outstanding shares will equal the issued ones.
Let’s now look at the head-to-head difference between Issued vs. Outstanding Shares.
| Basis | Issued Shares | Outstanding Shares |
|---|---|---|
| Definition | Investors and shareholders of the Company hold these shares. They also include the shares held by the Company in the treasury after it buys back its shares. | It is a share issued minus the shares held in the treasury. These are the actual number of shares that the investors hold. |
| Key difference | Issued Share includes the treasury stock. | It does not include treasury stock. |
| Reporting | The Financial statements don't report these shares. | Financial statements report these shares. |
| Financial performance | It does not give a complete picture of the company's financial performance while measuring key ratios on a per-share basis. | They are mainly used to measure the performance of the Company and find key ratios on a per-share basis. |
| Voting power | It includes treasury stock, which does not have voting power. | Another use is to determine the total shares available for voting and the percentage of shareholding and voting rights of each shareholder. |
| Quantity | They are more than or equal to outstanding shares. | Outstanding shares are less than or equal to issued shares. They can be equal to issued shares only if the treasury stock is zero. |
Conclusion
Issued vs. outstanding shares are financial terms related to the company's capital structure. We have seen the difference between the two terms. While issued shares include the treasury stock with the Company, outstanding shares are of more importance to the financial analysts. Outstanding shares provide the number of voting rights in the Company and help find the key financial ratios of the Company.
All public listed Companies have to adhere to listing requirements. Hence, they will disclose the number of issued and outstanding shares on their website and to stock exchanges.
Recommended Articles
This article has been a guide to the Issued vs. Outstanding Shares. Here we discuss the top differences between Issued vs. Outstanding Shares along with infographics and a comparison table. You may also have a look at the following articles –
- Equity Shares vs Preference Shares
- Treasury Stock Method
- Non-Cumulative Preference Shares
- Share Capital Formula
- Forfeited Shares
