Treasury Shares: The Secrets Behind The Big Buybacks
5paisa Research Team
Last Updated: 01 Jan, 2025 01:14 PM IST

Content
Introduction
Treasury shares are a part of a company's "Treasury" - much like your own rainy day savings or fund. These shares aren't available to be traded, and the companies don't record them in their balance sheets. In essence, these shares are a part of what can be legally traded in the market, but the company decided to park them in its store (or treasury) for later use.
There are many reasons why companies do that, and mostly it has to do with enhancing their value. When the number of floating shares reduces, the value automatically goes up for all the other outstanding ones.
That apart, treasury shares aren't really valuable in and of their own rights to a company. They are recorded in contra accounts in the balance sheets, and rarely do anything to the financials. Regardless, they are a form of corpus or cushions that companies keep for various purposes.
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