Treasury shares

Ok kiddo, let's talk about treasury shares!

So, you know how sometimes when you play with your toys, you might put one of your toys away in a special box for safekeeping? That's kind of like what companies do with their own shares of stock - they put them away for safekeeping, too. But instead of a toy box, they have something called a treasury.

When a company issues shares of stock, they're basically creating little pieces of ownership in the company that people can buy and sell. But sometimes, a company might decide to buy back some of those shares from people who own them. When they do that, those shares become treasury shares - they're still part of the company, but they're not being owned by anyone else at the moment.

There are a few reasons a company might want to buy back some of its own shares and turn them into treasury shares. Sometimes they want to use the shares as part of a new employee compensation plan, where they give the shares to employees as a kind of bonus. Other times, they might want to hold onto the shares as a kind of emergency fund, in case they need extra money in the future.

It's kind of like if you were saving up your allowance in a piggy bank - those pennies would still be part of your allowance, but they wouldn't be in your pocket anymore. The company's treasury shares are like the piggy bank, holding onto those shares for safekeeping until they're ready to use them again.

Does that make sense, kiddo?