Buy Back of Shares

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Project on “Buy Back of Shares” Contents |Sr.No. |Topic |Page No. | |1. |Introduction |1 | |2. |Share buyback- An Overview |2 | |3. |Share buyback: Positive Aspects |3 | |4. |Share buyback: Negative Aspects |4 | |5. |Which…show more content…
The repurchase of shares reduces the number of shareholders, which in turn enhances the earnings per share (EPS), and thus improves investors sentiments. SHARE BUY BACK: AN OVERVIEW SHARE BUY-BACK: OBJECTIVES A company may decide to buy back its shares for one of the following reasons: ➢ To return surplus cash to shareholders as an alternative to a higher dividend payment or investing the surplus cash in existing or new operations. ➢ Adjust or change the company’s capital structure quickly, say for those companies seeking to increase its debt/equity ratio. ➢ To increase earnings per share and net asset value per share as a possible signal to the market place that management is of the view that the prospects of the company justify a market price higher than that currently accorded by the market. ➢ To improved the various performance parameters like EPS,DPS, operating cash flow per share, etc. ➢ To thwart the attempts of a hostile takeover. SHARE BUY-BACK: POSITIVE ASPECTS ➢ The market generally interprets share buy-backs as positive signal. ➢ Shareholders have a choice of deciding whether or not to receive the payout by selling or holding their shares, unlike a dividend payout. ➢ Returning excess cash by way of a share buy-back gives a company greater flexibility with regard to its dividend policy ➢ Share buy-backs could enable a company to achieve its desired capital structure more

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