A company that has earnings in Year 2 equal to the earnings of Year 1 can improve its Year 2 reported earnings per share by

Question

Quizplus · Accepted Answer

Purchasing shares of treasury stock would decrease the number of outstanding shares, thereby increasing earnings per share without affecting the actual earnings of the company. The other options would not have a direct impact on the earnings per share. Selling additional common or preferred stock would dilute the ownership of existing shareholders and potentially decrease earnings per share. Selling shares of treasury stock at a price exceeding what was paid for the treasury stock would increase the company's cash balance but not necessarily impact earnings per share.

A Company That Has Earnings in Year 2 Equal to the Earnings