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 can transfer excess cash to shareholders, increase earnings per share, and maintain a constant dividend. The number of outstanding shares decreases, but the same amount of cash is distributed to a smaller number of shares, resulting in a higher earnings per share.

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