Asked by Benoit BOUDA on Jun 16, 2024
Verified
If a company purchases treasury stock its earnings per share will increase.
Treasury Stock
Shares that were issued and subsequently reacquired by the company, hence are not considered when calculating earnings per share or dividends.
Earnings Per Share
A financial metric 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.
- Understand the impact of treasury stock transactions on earnings per share and owners' equity.
Verified Answer
KW
Kendall WilkinsonJun 22, 2024
Final Answer :
True
Explanation :
When a company purchases treasury stock, the number of outstanding shares decreases. As a result, the earnings per share calculation will have a smaller denominator. This will increase the earnings per share value.
Learning Objectives
- Understand the impact of treasury stock transactions on earnings per share and owners' equity.
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