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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Alternatives to cash dividends
Hi sir, how does a share repurchase scheme increase earnings per share and gearing ? I don’t understand .
If the company buys back some shares, then there will be fewer shares in issue.
The total earnings won’t change, and therefore with fewer shares in issue the EPS will be higher.
The total long-term debt won’t change, and therefore with lower share capital the gearing will be higher.
Thank you.
You are welcome 🙂
