Issued Shares

Understanding Issued Shares

When engaging in the world of trading, there is a specific term that keeps popping up: Issued Shares. But what exactly does it mean? Especially, how does it impact your trading decisions? Let's delve into it.

Defining Issued Shares

Issued shares are part of the total number of shares that a corporation has authorized to be sold. These are the 'live' shares that are available for trading in the public market. It is important to distinguish between issued shares and the total number of authorized shares. The latter is the maximum number of shares a company has decided it can issue, while the former are those that have been issued and are in circulation.

Issued Shares Significance to Traders

The number of issued shares plays a significant role when it comes to trading. It has a direct influence on many financial metrics and ratios. In particular, earnings per share (EPS) and market capitalization calculations that are particularly relevant to traders, rely on the number of issued shares. Therefore, tracking the changes of issued shares can provide insightful information to traders and help shape their strategy.

Calculation of Issued Shares

Issued shares can be calculated by adding the total number of outstanding shares (those held by investors) with the treasury shares (those that a company has bought back) : Issued Shares = Outstanding Shares + Treasury Shares. The change in the number of issued shares due to events such as stock splits or additional share issuance can have a considerable impact on a company's financials and consequently on the trading decisions.

Conclusion

In conclusion, understanding the number of issued shares and its relevance is crucial if you aim to establish a foothold in the trading industry. It is not just a number, but a critical component of numerous financial calculations and overall stock market operations that can impact your trading activities significantly.