Repurchasing shares reduces the number of shares outstanding because the company is buying back its own shares. This action typically increases earnings per share (EPS) because the same amount of earnings is distributed among fewer shares.

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Repurchasing Shares

Question 89

Multiple Choice

Repurchasing shares

A) has no effect on the number of shares outstanding or on earnings per share.
B) increases the number of shares outstanding and increases earnings per share.
C) reduces the number of shares outstanding and reduces earnings per share.
D) increases the number of shares outstanding and decreases earnings per share.
E) reduces the number of shares outstanding and increases earnings per share.

Correct Answer: