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You note a companys balance sheet that it claims 4,000,000 shares authorized, 2,500,000 shares issued, and...

You note a companys balance sheet that it claims 4,000,000 shares authorized, 2,500,000 shares issued, and 1,500,000 outstanding. How many shares of treasury stock, if any, does the company currently have?

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Answer #1

Answer:

Treasury stock refers to the shares that the company has reacquired from the market.

The number of shares outstanding refers to the shares issued to the investors and is used for EPS calculations.

Shares outstanding = Shares issued (-) treasury stock

1,500,000 = 2,500,000 (-) Treasury Stock

Treasury Stock = 1,000,000 shares

Note:

The authorized shares do not have any usage in the calculations.

In case of any doubt or clarification, feel free to come back via comments.

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