All Else Equal,when a Company Uses Excess Cash to Buy

question 103

Multiple Choice

All else equal,when a company uses excess cash to buy back some of its outstanding common shares,which of the following ratios will be affected directly in the manner described below?

• A)The return on equity (ROE)will decrease.
• B)Earnings per share (EPS)will increase.
• C)The inventory turnover ratios will increase.
• D)None of the above.

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Definitions:

Year 2

Typically refers to the second year of a specific time frame or series, such as a company's second fiscal year.

Return On Investment

A metric utilized to assess an investment's efficiency or profit in comparison to its expenditure.

Breakdown Theory

Suggests that social movements emerge when traditional norms and patterns of social organization are disrupted.

Nonroutine Collective Action

Spontaneous, unstructured group actions that occur in response to unforeseen events or crises, often bypassing traditional organizational structures.