Asked by Garrett Brown on May 28, 2024
Verified
Aircraft Canada expects sales and net income to remain constant next year. If Aircraft Canada wishes to increase its earnings per share figures, then Aircraft Canada could:
A) Increase the amount of dividend paid per share.
B) Decrease the amount of dividend paid per share.
C) Purchase more assets.
D) Issue additional shares of common stock.
E) Repurchase outstanding shares of common stock.
Earnings Per Share
Earnings Per Share (EPS) is a financial ratio that indicates the portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's profitability.
Dividend Paid
Cash payment distributed to shareholders out of a company’s earnings, reflecting a return on the investment made in the company's equity.
Repurchase Outstanding
A corporate finance strategy where a company buys back its own shares from the marketplace, reducing the number of outstanding shares.
- Recognize approaches for enhancing financial well-being in both the immediate and extended future.
- Acquire knowledge about the essence and computation of earnings per share (EPS) and its significance for investors.
Verified Answer
GA
ghous ahmedMay 28, 2024
Final Answer :
E
Explanation :
Repurchasing outstanding shares of common stock would reduce the number of shares outstanding, which, assuming net income remains constant, would increase the earnings per share (EPS) figure. This is because EPS is calculated by dividing the net income by the number of outstanding shares. Reducing the denominator (outstanding shares) while keeping the numerator (net income) constant increases the value of the quotient (EPS).
Learning Objectives
- Recognize approaches for enhancing financial well-being in both the immediate and extended future.
- Acquire knowledge about the essence and computation of earnings per share (EPS) and its significance for investors.