Treasury stock explained

Treasury stock and share buyback accounting. How does it work, and how does it affect the financial statements? In this video we show how purchases of treasury stock (or “share buybacks”) affect the cash flow statement and the balance sheet, we walk through the accounting for both share buybacks as well as re-issuing shares, and discuss the effect of share buybacks on earnings per share. All of this in the context of a real-life example, so this goes beyond just the textbook explanation!

⏱️TIMESTAMPS⏱️
00:00 Introduction to treasury stock
00:29 Stock repurchase example
01:39 Accounting for share buybacks
02:11 Treasury stock on the balance sheet
02:37 Treasury stock overview
03:04 Accounting for re-issuing treasury stock
04:32 How share repurchases affect EPS

Philip de Vroe (The Finance Storyteller) aims to make strategy, finance and leadership enjoyable and easier to understand. Learn the business vocabulary to join the conversation with your CEO at your company. Understand how financial statements work in order to make better stock market investment decisions. Philip delivers training in various formats: YouTube videos, classroom sessions, webinars, and business simulations. Connect with me through Linked In!

[aaronabrahammohan]

You teach with so much passion and relevance. Efficient Teaching. You're amazing 🙏😍

[funubergames]

companies have been aggressively buying back stock the past decade inflating their share price. if we enter a recession and liquidity is tight i would expect a lot of companies to dump their stock back into the market to get some cash. this will drag down stock prices. does this scenario sound possible?

[Kazimov]

Dear Finance Storyteller. A question.

Why is it when you look at the reissuance line on the YoY table for Adobe both the APIC(1768) and Retained Earnings(-234601) are filled. How is that possible? Since according to the cost method, APIC has to be completely offset first and only then do you debit the remaining difference loss into Retained Earnings. Basically, on the reissuance line only either APIC or Retained Earnings can be filled at a time, not both together. What is happening here? Thank you very much.

[nicolassuarezblog]

thanks for sharing, i have learned a lot of about it, i do not uderstand why a company use basic shares and not diuted, diluted are the real numbers of shares, is it not? thnaks in advance

[ignacioram]

Purchase treasury stock = buyback( purchase of shares oustanding)?

[nicolassuarezblog]

Thank you very much for sharing, great, I would like to ask for check if you have maked any video about how pensions affect the valutaion on debt, and when to take into account this factor, where to see, if dont I think it would be a interesing case, i think very important, best regards