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
Related questions
Question
100%
Explain and expound what have been discussed in the attached file.
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education