Many companies in recent years have bought back their common stock. For example, IBM, with large cash

Question:

Many companies in recent years have bought back their common stock. For example, IBM, with large cash holdings, spent almost $37.5 billion over three years repurchasing its stock.¹⁸ What are the reasons companies buy back their own shares? What is the effect of common stock buybacks on earnings per share, return on equity, return on assets, debt to equity, and the current ratio?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...

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