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Buy Back of Shares Concept - B.com Video Lecture - B Com

FAQs on Buy Back of Shares Concept - B.com Video Lecture - B Com

1. What is the concept of buy back of shares?

Ans. Buy back of shares refers to a corporate action where a company repurchases its own outstanding shares from its shareholders. This means that the company uses its surplus cash to buy back its own shares from the open market or directly from its shareholders.

2. Why do companies opt for buy back of shares?

Ans. Companies opt for buy back of shares for various reasons. One common reason is to return excess cash to shareholders and enhance shareholder value. It also helps in improving key financial ratios like earnings per share (EPS) and return on equity (ROE). Additionally, it can be used to prevent hostile takeovers or to consolidate ownership.

3. How does a company finance the buy back of shares?

Ans. A company can finance the buy back of shares using different methods. It can use its cash reserves or surplus cash to fund the buy back. Alternatively, the company can also opt for debt financing or use its retained earnings to repurchase the shares. The method chosen depends on the financial position and objectives of the company.

4. What are the benefits of buy back of shares for shareholders?

Ans. Buy back of shares provides several benefits to shareholders. Firstly, it increases the ownership percentage of the remaining shareholders, leading to higher control and potential increase in future earnings. Secondly, it can result in an increase in the share price due to reduced supply of shares in the market. Finally, shareholders who participate in the buy back can enjoy immediate liquidity by selling their shares to the company.

5. Are there any legal requirements or restrictions for buy back of shares?

Ans. Yes, there are legal requirements and restrictions for buy back of shares. Companies need to comply with the regulations set by the regulatory authorities of the country where they are listed. These regulations may include restrictions on the maximum amount of shares that can be repurchased, the method of buy back, and the timing of the buy back. It is important for companies to comply with these regulations to avoid any legal consequences.

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	Dec 04, 2024 Last updated

Buy Back of Shares Concept - B.com for B Com2024 is part of B Com preparation. The notes and questions for Buy Back of Shares Concept - B.com have been prepared according to the B Com exam syllabus. Information about Buy Back of Shares Concept - B.com covers all important topics for B Com2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Buy Back of Shares Concept - B.com.

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