Select Page
QuestionsCategory: Financials QuadrantTreasury Shares vs Cancellation
Teik Siang Teoh asked 2 years ago

Treasury shares will increase as company buys back their own shares. I understand that this will be positive to the company as this will improve earnings. How about when the company cancels the treasury shares? What will be the impact to the financials? Is it a positive sign? 

1 Answers
Victor Chng answered 2 years ago

Hi Teik Siang,
 
When the company buy back the shares they can choose to cancel it or keep it. Cancellation means that the shares are no longer in circulation unlike treasury shares where you can still have the option to use it to issue shares. As long as the company buy back share at the right price, it is generally a good sign. 

Teik Siang Teoh replied 2 years ago

Thanks for the reply, in terms of the financial statements, what will be the impact? Is it just a reduction of the Share Capital in the Equity (Balance Sheet)? Anything else?

Victor Chng replied 2 years ago

Treasury shares in the balance sheet is negative figure already which reduce the equity. Hence, when the cancellation happen, there is no impact on the balance sheet

Teik Siang Teoh replied 2 years ago

Understand, thanks!

Victor Chng replied 2 years ago

welcome :)