What is the definition of treasury stock?

Treasury stock refers to shares that a company has repurchased from the open market and is holding in its own treasury. These shares have not been retired, meaning they are still considered to be issued but are not currently outstanding. When a company decides to buy back its own shares, it typically does this for reasons such as to return capital to shareholders, to increase earnings per share by reducing the number of shares outstanding, or to prevent hostile takeovers.

This concept is crucial for understanding a company's equity structure and its impact on financial statements. Treasury stock is recorded on the balance sheet as a contra equity account, which reduces total shareholders' equity.

The other definitions provided do not accurately represent treasury stock. Shares sold to the public constitutes outstanding shares, the value printed on a stock certificate refers to par value or stated value, and net worth divided by outstanding shares relates to earnings per share or book value per share rather than the concept of treasury stock itself. Therefore, the definition centered on re-acquired shares fits the characteristics and accounting treatment of treasury stock perfectly.