A firm may use a stock repurchase for all of the following reasons except
A) to dispose of excess cash
B) to increase retained earnings
C) as part of a financial restructuring
D) to reduce takeover risk

Question

Quizplus · Accepted Answer

A stock repurchase does not directly increase retained earnings. It may indirectly lead to an increase in earnings per share, but retained earnings remains the same. The other options - A, C, and D - are all common reasons for a firm to use a stock repurchase.

A Firm May Use a Stock Repurchase for All of the Following