When a company uses excess cash to buy back some of its outstanding common stock

Question

When a company uses excess cash to buy back some of its outstanding common stock, which of the following ratios will be affected directly in the manner described below? A) earnings per share (EPS) will increase B) there will not be any effect on the three ratios C) return on equity (ROE) will decrease D) the price earnings (PE) ratio will increase When a company uses excess cash to buy back some of its outstanding common stock, which of the following ratios will be affected directly in the manner described below? A) earnings per share (EPS) will increase B) there will not be any effect on the three ratios C) return on equity (ROE) will decrease D) the price earnings (PE) ratio will increase A) earnings per share (EPS) will increase B) there will not be any effect on the three ratios C) return on equity (ROE) will decrease D) the price earnings (PE) ratio will increase

Explanation / Answer

b. there will not be effect on the three ratios.

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