Decrease in Capital Stock

Category

Cash Flow

Units

Currency

US-GAAP elements

PaymentsForRepurchaseOfEquityPaymentsForRepurchaseOfCommonStockPaymentsForRepurchaseOfPreferredStockAndPreferenceStock

Reference

ASC 230, Statement of Cash Flows (financing activities); ASC 505, Equity

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Decrease in capital stock is the cash a company paid during a period to buy back its own shares, whether common or preferred. Share repurchases, also called buybacks, can be made in the open market, through accelerated repurchase agreements with a bank, by tender offer, or by redeeming preferred stock. The amount is an outflow in the financing section of the cash flow statement.

Repurchased shares are either retired or held as treasury stock. Either way, the shares outstanding fall and cash leaves the company.

ASC 230 treats cash paid to owners to reacquire their shares as a financing outflow, and ASC 505 governs how the repurchase is recorded in equity. In XBRL, companies tag common stock buybacks PaymentsForRepurchaseOfCommonStock, preferred redemptions PaymentsForRepurchaseOfPreferredStockAndPreferenceStock, and a combined figure PaymentsForRepurchaseOfEquity. Beyond the cash flow line, SEC rules require companies to disclose repurchases by month in their periodic reports, which shows the timing and average price paid.

The cash figure can differ from the repurchases shown in the statement of stockholders' equity. Shares bought near period end but settled afterward shift cash into the next period. Accelerated share repurchase programs pay the full amount up front while shares are delivered over months. And cash paid to tax authorities for shares withheld from employee equity awards is also a financing outflow, which some companies report within repurchases and others on a separate line.

Buybacks are a main way companies return cash to shareholders, alongside dividends. Analysts compare the decrease in capital stock with free cash flow to see whether buybacks are funded by the business or by new debt, and with the change in diluted share count to see how much of the spending simply offsets dilution from stock-based compensation. Large buybacks with a flat share count mean the program is mostly absorbing employee grants rather than shrinking the company's equity.