Definition

Noun: * Capital stock that has been reacquired by the issuing corporation: Treasury stock refers to shares of a company's own stock that it has issued and subsequently repurchased from the open market or from shareholders. These repurchased shares are held in the company's own treasury.

Usage

Treasury stock is a key concept in corporate finance and accounting. It represents capital that has been returned to the company. These shares are not considered when calculating earnings per share (EPS) or dividends per share, as they are not held by outside investors.

Examples

• The board authorized the repurchase of up to 1 million shares to be held as treasury stock.
• A company may resell its treasury stock to raise capital at a later date.
• Holding treasury stock reduces the number of shares outstanding on the market.

Advanced Usage

• Accounting Treatment: Treasury stock is recorded as a contra equity account, meaning it is subtracted from total shareholders' equity on the balance sheet. It is an asset to the corporation itself, but not in the traditional sense; it is more accurately a reduction of equity.
• Strategic Purpose: Companies may hold treasury stock for various strategic reasons, including to support employee stock option plans, to use in acquisitions, to prevent a hostile takeover by reducing available shares, or to signal to the market that management believes the stock is undervalued.

Variants and Related Words

• Treasury Shares: A synonymous term for treasury stock.
• Buyback / Share Repurchase: The action a company takes to acquire its own shares, which then become treasury stock.
• Retired Stock: Shares that have been repurchased and permanently canceled, as opposed to being held in treasury. Treasury stock can be retired or reissued.

Synonyms

• Reacquired stock
• Treasury shares

Key Distinctions

• Treasury Stock vs. Outstanding Stock: Treasury stock is issued but not outstanding; it does not confer voting rights or receive dividends. Outstanding stock is held by external shareholders and has all shareholder rights.
• Treasury Stock vs. Retired Stock: Treasury stock is held by the company and can be reissued. Retired stock is canceled permanently and cannot be reissued; its status is eliminated from the company's charter.

Noun

1. stock that has been bought back by the issuing corporation and is available for retirement or resale; it is issued but not outstanding; it cannot vote and pays no dividends