Asked by Abylay Tastanbekov on Apr 28, 2024
Verified
If you ignore taxes and transaction costs, a stock repurchase will increase the earnings per share.
Earnings Per Share
A company's profit divided by the outstanding shares of its common stock, serving as an indicator of a company's profitability.
Stock Repurchase
A financial strategy where a company buys back its own shares from the marketplace, reducing the amount of outstanding stock.
- Comprehend how repurchasing shares affects a company's earnings per share and its equity.
Verified Answer
AM
Audrey MoiseMay 02, 2024
Final Answer :
True
Explanation :
When a company repurchases its own stock, the number of outstanding shares decreases, which typically results in an increase in earnings per share (EPS) since the same amount of earnings is distributed over fewer shares.
Learning Objectives
- Comprehend how repurchasing shares affects a company's earnings per share and its equity.