Petra Sales Company has issued 200 000 ordinary shares for $4 per share.The directors decide to undertake a share buy-back of 10 000 shares at $5 per share.This will have no overall effect on total shareholders' equity.

Question

Quizplus · Accepted Answer

The share buy-back will increase the company's retained earnings and decrease the number of outstanding shares, resulting in an increase in earnings per share and book value per share. This will have an overall effect on the total shareholders' equity. Therefore, the statement is false.

Petra Sales Company Has Issued 200 000 Ordinary Shares for $4