[Cynthia514]

Can any one explain to me the difference of these kind of share.
Can the number of weighted average shares be bigger the number of authorized shares?
Are the weighted average shares outstanding shares?
And issued share?

[hamzashakaa]

Outstanding shares: Stock currently held by investors, including restricted shares owned by the company's officers and insiders, as well as those held by the public. Shares that have been repurchased by the company are not considered outstanding stock.

Authorized Shares: The maximum number of shares that a corporation is legally permitted to issue, as specified in its articles of incorporation. This figure is usually listed in the capital accounts section of the balance sheet

Issued shares: is the number of shares that have been sold to an outside party at any point in the past. These shares may currently be held either by others or by the company itself as treasury shares.

[codyman144]

Can any one explain to me the difference of these kind of share.
can the number of weighted average shares be bigger the number of authorized shares?
are the weighted average shares outstanding shares?
and issued share?

Hi Cynthia,

hamzashakaa gave you some good definitions to work off. Also you could just Google search or Wikipedia these for some good info.

By weighted average shares I would think anyone would be referring to the outstanding shares because this is the number that really matters. So therefore, weighted average shares could not exceed the number of authorized shares, unless the company in question had some kind of reduction in authorized shares but this does not make any sense to me... Still it would seem impossible to have higher outstanding shares than authorized shares. Are you learning about stock splits, etc? It’s a fun topic. :)

Let me know if you have any more questions.

[Cynthia514]

Well, actually I'm learning how to calculate the weighted average number of outstanding share to calculate the EPS and diluted EPS also.
However, the weighted average number of outstanding share I got is usually higher than that of the authorized shares.
I was so confused.
And yes, they do have stock splits and stock dividends. I think that's the case why the authorized shares is less than the weighted average outstanding shares.
However, what's the point to have the authorized shares (the limit number of shares a company can issue) then the company can increase the amount as they want with a stock split or stock dividends?

[codyman144]

Well, actually I'm learning how to calculate the weighted average number of outstanding share to calculate the EPS and diluted EPS also.
However, the weighted average number of outstanding share I got is usually higher than that of the authorized shares.
I was so confused.
And yes, they do have stock splits and stock dividends. I think that's the case why the authorized shares is less than the weighted average outstanding shares.
However, what's the point to have the authorized shares (the limit number of shares a company can issue) then the company can increase the amount as they want with a stock split or stock dividends?

In the case of a stock split you need to increase all types of shares by the factor of the split. Assume 2 for 1 split, 1000 authorized, 700 issued and 650 outstanding. After the split you now have 2000, 1400 and 650 respectively. That should clear up your problem. For stock dividends I think those come out of authorized shares but I would have to look it up to be sure.

The reason for having a limit to authorized shares is so that the owners (stockholders) know that their ownership interest cannot be diluted beyond that amount. Every time the company issues additional shares they are diluting the value of all the other shares out there by allowing new stock to have ownership interest. This is the whole idea behind calculating diluted EPS.

In a stock split all the owners have the same claims to the assets of the firm they had before, now they just have two shares now instead of one. But can you see how when the company issues more shares this hurts the existing stockholders?

[Cynthia514]

"In the case of a stock split you need to increase all types of shares by the factor of the split. Assume 2 for 1 split, 1000 authorized, 700 issued and 650 outstanding. After the split you now have 2000, 1400 and 650 respectively."
Sorry, but the 650 should be 1300 or still 650?

[codyman144]

Your right typo on my part... 1300

[Cynthia514]

Ssued shares: is the number of shares that have been sold to an outside party at any point in the past. These shares may currently be held either by others or by the company itself as treasury shares.
Does issued shares include treasury shares?? I thought treasury shares are considered unissued shares.

[codyman144]

Issued shares include all outstanding shares and treasury shares. Authorized is always the highest, then issued and then outstanding. That is why they are listed in that order.

Issued shares - Wikipedia, the free encyclopedia