Reasons that a company would purchase treasury stock include all of the following EXCEPT:
A)management wants to avoid a takeover by an outside party.
B)it needs the stock for distribution to employees under stock purchase plans.
C)it wants to increase net assets by buying its stock low and reselling it at a higher price.
D)management wants to decrease earnings per share of common stock.

Question

Quizplus · Accepted Answer

The purchase of treasury stock would decrease the number of outstanding shares, thus increasing earnings per share. So, management would not purchase treasury stock if they want to decrease earnings per share. Choices A, B, and C are valid reasons for a company to purchase treasury stock.

Reasons That a Company Would Purchase Treasury Stock Include All