Treasury stock


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Treasury stock

Common stock that has been repurchased by the company and held in the company's treasury.

Treasury Shares

Stock that a publicly-traded company issues but does not place with investors, or which it has bought back from shareholders. That is, the company holds its treasury shares back until such time as selling them becomes beneficial. Treasury shares have been issued, but they are not considered shares outstanding. Selling treasury shares to the public can be a less expensive way for the company to raise capital because the amount it spent issuing them previously is a sunk cost. Treasury shares are not included in "per share" calculations.

treasury stock

The shares of a firm's stock that have been issued and then repurchased. Treasury stock is not considered in paying dividends, voting, or calculating earnings per share. It may be retired or reissued. See also retirement.

Treasury stock.

Treasury stock is stock that an issuing company repurchases from its shareholders.

The company may choose to repurchase if it has cash available, as an alternative to investing it in expanding the business. Or it may issue bonds to raise the money it needs to repurchase, which changes the company's debt-to-equity ratio.

In most cases, the company offers to pay a premium, or more than the market price, to build its cache of Treasury stock.

Reducing the number of outstanding shares boosts the per-share value of the remaining shares and tends to increase the market price of the stock. That results, in part, because no dividends are paid on Treasury stock and it's not included in earnings-per-share calculations, boosting that ratio.

A company may buy back its stock for a number of other reasons, ranging from preventing a hostile takeover to having shares available if employees exercise their stock options.

It may also choose to resell the shares or use them to meet the demand for shares from holders of convertible securities.

References in periodicals archive ?
Although paying dividends would accomplish the same thing, purchasing treasury stock is much more flexible and controllable.
The other companies saddled with treasury stocks are Mahindra & Mahindra, BPCL, IOC and United Spirits.
The second new method replaces the treasury stock method when calculating the effect of a stock rights issue.
If it is sold for more or less than acquisition cost, the difference is debited or credited to contributed capital from treasury stock transactions.
Companies buying back their shares must, as a matter of principle, do so in open bids, while the government would not set the upper limit of treasury stocks so long as they are acquired within the limits of their dividend-paying capabilities.
In accordance with the terms of the prospectus dated 14 January 1983, the Bank of England revealed that the rate of interest payable on the 2 1/2% Index-linked Treasury Stock for the interest payment due on 26 July 2015 will be GBP3.
Reference) Possession of treasury stock as of September 2, 2013
The LDP's move is intended to maintain the stability of the stock market after legal restrictions on treasury stock are lifted as planned.
The leader of Japan's life insurance industry on Friday voiced support for easing restrictions on company share buybacks to allow companies to buy and hold their own shares as treasury stock a way to prop up weak stock prices.
How we account for the purchase of treasury stock depends on whether the firm intends to retire the stock or to resell it.
M2 EQUITYBITES-September 17, 2014-Bank of England to pay interest on 2 1/2% Index-linked Treasury Stock 2020
BANKING AND CREDIT NEWS-September 17, 2014-Bank of England to pay interest on 2 1/2% Index-linked Treasury Stock 2020