All else equal,when a company uses excess cash to buy back some of its outstanding common shares,which of the following ratios will be affected directly in the manner described below?

Question

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When a company buys back some of its outstanding common shares, the number of outstanding shares decreases. As a result, the earnings per share (EPS) increase because earnings are being divided among fewer shares. However, the return on equity (ROE) may not necessarily be affected as ROE is a measure of how effectively a company is using its equity to generate profits. The inventory turnover ratio is also unlikely to be affected directly by share buybacks.

All Else Equal,when a Company Uses Excess Cash to Buy