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When a Company Uses Excess Cash to Buy Back Some

Question 144

Multiple Choice

When a company uses excess cash to buy back some of its outstanding common stock,which of the following ratios will be affected directly in the manner described below?


A) Return on equity (ROE) will decrease.
B) Earnings per share (EPS) will increase.
C) The Price Earnings (PE) ratio will increase.
D) There will not be any effect on the three ratios.

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