What Effect Will the Purchase of Treasury Stock Have on Total

question 43

Multiple Choice

What effect will the purchase of treasury stock have on total stockholders' equity and earnings per share, respectively?

• A) Increase and decrease
• B) Decrease and increase
• C) Decrease and no effect
• D) Decrease and decrease

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Definitions:

Long-Term Borrowings

Loans or debt obligations with repayment schedules extending beyond one year, used to finance more permanent or significant investments.

Working Capital

The measure of a company's short-term financial health and operational efficiency, calculated as current assets minus current liabilities.

External Financing

The process of obtaining capital from outside sources, such as banks, investors, or financial markets to fund operations, growth, and expansion projects.

Cash Sooner

A financial strategy aimed at accelerating cash inflows or reducing the time it takes to receive payments or revenues.