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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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When a company participates in a stock buyback program, it means that the company is buying shares of its own stock and taking them off the market. With this simple definition in mind, how would a company’s stock buyback program affect its Earnings per Share?

To determine

State the effect of company’s stock buyback on its earnings per share.

Explanation

Earnings per share

Earnings per share is a profitability ratio used by most of the investors as it computes the income created by per share of stock. It is computed as the ratio of net income after deducting preferred dividends to average common shares...

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