Dawn’s question:
What information is disclosed on the 1120S, Schedule L, line 26, “cost of treasury stock”? Is this ever relevant to the lending process?
Linda says:
Treasury stock means stock that had been issued and was bought back by the company. So it will always be blank unless they bought their own stock back from shareholders at some point.
As long as there is no change between the beginning and ending balance, it has no cashflow impact that year. If there is a difference, then the amount of the increase does represent a use of the company cashflow that year. If there is and it is significant, you might ask about their plans for continuing to buy back their own stock. To the extent they are spending their money on that, it is not available to pay debt.
It is likely to be extremely rare so will not generally be an issue.
