When a company repurchases its shares or pays a dividend,it raises shareholders' equity.

Question

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When a company repurchases its shares, it reduces shareholders' equity because it is using its cash (an asset) to buy back shares, effectively reducing the equity. Similarly, paying a dividend also reduces shareholders' equity because it is a distribution of profits to shareholders, reducing the company's retained earnings.

When a Company Repurchases Its Shares or Pays a Dividend,it