Share Classifications
Chapters in this video
- 0:00 Meet Carla and the nested-container hierarchy
- 1:29 Authorized shares and the charter ceiling
- 2:23 Issued shares and the permanent label trap
- 3:32 Treasury stock: dormant, no votes, no dividends
- 5:35 Outstanding equals issued minus treasury
- 6:17 Par value as accounting fiction
- 7:20 Carla's cat cafe worked example
- 7:57 Rapid-fire exam recap
What this video covers
- The share hierarchy rule that authorized is always greater than or equal to issued, which is always greater than or equal to outstanding
- Why a company cannot exceed its authorized share count without a shareholder vote to amend the corporate charter
- What "issued" actually means, and why repurchased shares keep the issued label permanently
- Treasury stock mechanics: no voting rights, no dividends, and excluded from earnings per share (EPS) calculations
- The formula outstanding shares equals issued minus treasury, and why outstanding is the correct denominator for EPS and book value per share
- Why par value (or stated value for no-par stock) has zero relationship to market price
- What happens to the issued share count when treasury stock is retired versus reissued
Read the full lesson, free
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