Treasury Stock FAQs What is treasury stock? Treasury Stock is the corporation’s own capital stock, either common or preferred, that has been issued and subsequently reacquired by the firm, but not canceled. What are the benefits of buying treasury stocks? There are a few potential benefits for companies that buy back their own shares. First, it can help to boost the value of the remaining shares by reducing the number of outstanding shares. This can make the stock more attractive to investors and help to drive up the share price. Additionally, buying back shares can be a way for companies to return money to shareholders, and it can also help to reduce the company's overall financial risk. What are some of the risks associated with treasury stock? There are a few potential risks associated with Treasury Stock. First, if a company buys back its shares at a price above the current market value, it can reduce the overall value of the company. Additionally, buying back shares can be a way for companies to return money to shareholders, which can impact the company's ability to reinvest in its business or pay down debt. Finally, if a company holds too much Treasury Stock, it can actually increase the company's financial risk. What effect does the sale of treasury shares below the original purchase price have on assets and retained earnings? If a company has purchased treasury shares at a total cost of $25 per share, then sells those shares for $24, this transaction would cause an increase in Revenues and a decrease in Cash. If treasury shares are not resold, what effect would this have on assets and retained earnings? If a company purchases treasury shares and then does not re-sell them, there would be no effect on either assets or Retained Earnings. About the Author True Tamplin, BSc, CEPF® Facebook Linkedin Instagram Twitter Youtube True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists. True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics. To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.