Authorized, Outstanding, and Issued Shares The corporate charter of a firm indicates how many authorized shares it can issue. The firm cannot sell more shares than the charter authorizes without obtaining approval through a shareholder vote. To avoid later amendment of the charter, firms generally attempt to authorize more shares than they initially plan to issue. Authorized shares become outstanding shares when they are issued or sold to investors. If the firm repurchases any of its outstanding shares, these are recorded as treasury stock and are no longer considered outstanding shares. Issued shares are the shares of common stock that have been put into circulation; they represent the sum of outstanding shares and treasury stock.
Authorized, Outstanding, and Issued Shares The corporate charter of a firm indicates how many authorized shares it can issue. The firm cannot sell more shares than the charter authorizes without obtaining approval through a shareholder vote. To avoid later amendment of the charter, firms generally attempt to authorize more shares than they initially plan to issue. Authorized shares become outstanding shares when they are issued or sold to investors. If the firm repurchases any of its outstanding shares, these are recorded as treasury stock and are no longer considered outstanding shares. Issued shares are the shares of common stock that have been put into circulation; they represent the sum of outstanding shares and treasury stock.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Explain and expound what have been discussed in the attached file.
![stock.
Authorized, Outstanding, and Issued Shares
The corporate charter of a firm indicates how many authorized shares it can
issue. The firm cannot sell more shares than the charter authorizes without
obtaining approval through a shareholder vote. To avoid later amendment of the
charter, firms generally attempt to authorize more shares than they initially plan
to issue.
Authorized shares become outstanding shares when they are issued or
sold to investors. If the firm repurchases any of its outstanding shares, these
are recorded as treasury stock and are no longer considered outstanding
shares. Issued shares are the shares of common stock that have been put
into circulation; they represent the sum of outstanding shares and treasury
stock.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3d67ee40-47dd-4d55-8eef-934bdbc491b8%2F3f12b7c4-f891-4276-a69b-145e14c3c509%2Fu1mkm6d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:stock.
Authorized, Outstanding, and Issued Shares
The corporate charter of a firm indicates how many authorized shares it can
issue. The firm cannot sell more shares than the charter authorizes without
obtaining approval through a shareholder vote. To avoid later amendment of the
charter, firms generally attempt to authorize more shares than they initially plan
to issue.
Authorized shares become outstanding shares when they are issued or
sold to investors. If the firm repurchases any of its outstanding shares, these
are recorded as treasury stock and are no longer considered outstanding
shares. Issued shares are the shares of common stock that have been put
into circulation; they represent the sum of outstanding shares and treasury
stock.
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