The directors of Highlands Marble Works established three goals for the coming year: 1) transfer some of the firm's excess cash to the shareholders; 2) increase the earnings per share; and 3) maintain a constant dividend. Which one of the following actions best meets these goals?

Question

Quizplus · Accepted Answer

A stock repurchase meets all three goals by using excess cash to buy back shares, which reduces the number of outstanding shares, potentially increasing earnings per share, and does not affect the dividend policy, thus maintaining a constant dividend.

The Directors of Highlands Marble Works Established Three Goals for the Coming