Treasury Stock, also known as treasury shares, refers to the shares of a company's own stock that it has repurchased and currently holds in its own treasury. These shares can be held for a variety of reasons, such as to provide shares for employee stock option plans, to be used as a form of corporate finance, or to be resold later to the public.When a company repurchases its own shares, it reduces the number of outstanding shares and increases the ownership stake of remaining shareholders. This can have a positive impact on the company's earnings per share (EPS) and return on equity (ROE), as the same level of earnings is divided among a smaller number of shares.On the balance sheet, treasury stock is reported as a reduction of the company's equity. The cost of repurchasing the shares is subtracted from the company's retained earnings and is recorded as a separate line item on the balance sheet.For example, if a company has 1,000 shares outstanding and repurchases 100 shares for $50 per share, the cost of repurchasing the shares would be $5,000. The company's equity would be reduced by $5,000 and the treasury stock would be recorded as $5,000 on the balance sheet.In summary, Treasury stock, also known as treasury shares, refers to the shares of a company's own stock that it has repurchased and currently holds in its own treasury.
