Glossary

Treasury stock

Treasury stock are shares that have been issued by a firm, but are being kept ‘in treasury’ - ie they are being kept for possible subsequent reissue.

Treasury stock are shares that have been issued by a firm, but are being kept in treasury'. This just means they are being kept for possible subsequent reissue. The reasons vary. It might be that the firm has done a share buyback (to boost earnings per share and return cash to shareholders) but doesn't want to cancel the shares it is buying back. Or perhaps the shares are being kept to one side to be used as part of an employee remuneration deal later.

These treasury shares don't carry voting rights and don't pay dividends and should not normally be used in ratio calculations such as earnings per share. The main advantage of them is that the company has already gone through the administrative hassle of issuing them. This makes a subsequent issue cheaper and faster than a full issue of brand new shares, which is the only option once shares are cancelled.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.
Advertisement

Most Popular

Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/currencies/600842/eur-usd-euro-slide-against-us-dollar
Currencies

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Visit/economy/uk-economy/600862/britains-economy-might-spring-a-surprise-on-the-doomsayers-this-year
UK Economy

Britain’s economy might spring a surprise on the doomsayers this year

The UK economy is looking pretty good – we’re more at risk of a boom than a bust, says John Stepek. Here’s why, and what it means for your portfolio.
20 Feb 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019