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

Question

Quizplus · Accepted Answer

The acquisition of treasury stock decreases stockholders' equity because the company is using its own cash to buy back shares. It increases earnings per share (EPS) because there are fewer shares outstanding, which typically results in a higher EPS if net income remains constant.

What Effect Will the Acquisition of Treasury Stock Have on Stockholders