Answer:
8.47%
Explanation:
WACC = (Cost of equity * Weight of equity) + (Cost of debt capital * Weight of debt capital)*(1 - tax)
WACC = (11*(1/(0.7+1)) + (7.5*(0.7/(1+0.7))*(1-.35)
WACC = (11*0.5882) + (7.5*0.4118*0.65)
WACC = 6.4702 + 2.007525
WACC = 8.477725
WACC = 8.47%
So, the weighted average cost of capital of company is 8.47%.
When using a cost-based price, the denominator in the calculation always includes the costs included in the base plus the desired profit.
a. True
b. False
Each business day, on average, a company writes checks totaling $34,500 to pay its suppliers. The usual clearing time for the checks is five days. Meanwhile, the company is receiving payments from its customers each day, in the form of checks, totaling $45,500. The cash from the payments is available to the firm after three days.
Required:
a. Calculate the company’s disbursement float, collection float, and net float.
b. Calculate the company's disbursement float, collection float, and net float, if the collected funds were available in two days instead of three.
Answer:
Following are the response to the given question:
Explanation:
For point a:
[tex]Particulars\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount\\\\Disbursement \ \ float\ [34500 \times 5] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 172500\\\\Collection \ \ float\ [45500 \times 3] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 136500\\\\ net \ \ float \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 36000\\\\[/tex]
For point b:
[tex]Particulars\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount\\\\Disbursement \ \ float\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 172500\\\\Collection \ \ float\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 45500 \\\\ net \ \ float \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 12700\\\\[/tex]
Frankin Corporation's net cash provided by operating activities was $110; its capital expenditures were $65; and its cash dividends were $24. The company's free cash flow was:
Answer:
Free cash flow is $21
Explanation:
Given that:
Net cash provided by operating activities = $110
Capital expenditures = $65
Cash dividends = $24
Then,
Free cash flow = Net cash provided by operating activities - Capital expenditure - Cash dividends
Free cash flow = $110 - $65 - $24
Free cash flow = $21
What are costs that can be identified specifically with a cost objective, but are not direct labor or direct material costs?
Answer:
Other direct cost (ODC)
Explanation:
Other direct cost (ODCs) are costs that can be identified specifically with a final cost objective but are not treated as either a direct material or direct labor cost. Costs are identified as other direct cost so that it would be given proper treatment. Also, identifying costs as ODC helps in infective cost allocation.
Examples of ODCs include travel cost, preservations, equipment testing, consultancy and computer services, etc.
What is a production function? How does a long-run production function differ from a short-run production function? A. A function showing the minimum output that a firm can produce for every specified combination of inputs. In the short-run production function, all inputs are variable, whereas the long-run production function has at least one fixed input.. B. A function showing the highest output that a firm can produce for every specified combination of inputs. In the short-run production function, all inputs are variable, whereas the long-run production function has at least one fixed input. C. A function showing the minimum output that a firm can produce for every specified combination of inputs. In the long-run production function, all inputs are variable, whereas the short-run production function has at least one fixed input. D. A function showing the highest output that a firm can produce for every specified combination of inputs. In the long-run production function, all inputs are variable, whereas the short-run production function has at least one fixed input.
Answer:
A
Explanation:
Answer the question on the basis of the following data. All figures are in billions of dollars. The economy characterized by the data is: Multiple Choice experiencing expanding production capacity because net investment is positive. experiencing a trade surplus. experiencing declining production capacity because net investment is negative. exporting more than it imports.
Answer:
Experiencing declining production capacity because net investment is negative.
Explanation:
Monetary value of all goods and services produced in the country are known as Gross Domestic Products. The economy is said to be inclining if the value of GDP rises. The value of GDP is directly associated with increasing production.
Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 after they service their 4 year service life. Golden Sales managers want to evaluate the options of depreciation.
a. Compute the annual straight-line depreciation.
Provide the sample depreciation journal entry to be posted at the end of each of the years.
b. Prepare the journal entries for each year of the service life for these assets using the double-declining balance method.
1st year, Dec. 31
2nd year, Dec. 31
3rd year, Dec. 31
4th year, Dec. 31
Answer:
Golden Sales
a. Annual Straight-line Depreciation = $31,250
Sample Depreciation Journal Entries:
Journal Entry:
1st year, Dec. 31:
Debit Depreciation Expense $31,250
Credit Accumulated Depreciation $31,250
2nd year, Dec. 31:
Debit Depreciation Expense $31,250
Credit Accumulated Depreciation $31,250
3rd year, Dec. 31:
Debit Depreciation Expense $31,250
Credit Accumulated Depreciation $31,250
4th year, Dec. 31:
Debit Depreciation Expense $31,250
Credit Accumulated Depreciation $31,250
b. Journal Entries (Double-declining-balance method)
1st year, Dec. 31
Debit Depreciation Expense $67,500
Credit Accumulated Depreciation $67,500
2nd year, Dec. 31
Debit Depreciation Expense $33,750
Credit Accumulated Depreciation $33,750
3rd year, Dec. 31
Debit Depreciation Expense $16,875
Credit Accumulated Depreciation $16,875
4th year, Dec. 31
Debit Depreciation Expense $6,875
Credit Accumulated Depreciation $6,875
Explanation:
a) Data and Calculations:
Fixed assets bought on January 1 = $135,000
Estimated service life = 4 years
Estimated residual value = $10,000
Depreciable amount = $125,000 ($135,000 - $10,000)
Annual Straight-line Depreciation = $31,250 ($125,000/4)
b. Double-declining balance method:
Depreciation rate = 100%/4 * 2 = 50%
Year 1 Depreciation = $67,500 ($135,000 * 50%)
Year 2 Depreciation = $33,750 ($67,500 * 50%)
Year 3 Depreciation = $16,875 ($33,750 * 50%)
Year 4 Depreciation = $6,875 ($16,875 - $10,000)
Consolidated Corporation,a U.S.firm,wishes to participate,but limit its involvement,in Middle Eastern markets.Consolidated empowers Doha Ltd. ,an Egyptian firm,to enter into contracts in certain countries on behalf of Consolidated.This is:________
A) a distribution agreement.
B) an agency relationship.
C) indirect exporting.
D) direct exporting.
Answer:
B) an agency relationship.
Explanation:
A contract can be defined as an agreement between two or more parties (group of people) which gives rise to a mutual legal obligation or enforceable by law.
There are different types of contract in business and these includes: fixed-price contract, cost-plus contract, bilateral contract, implies contract, unilateral contract, adhesion contract, unconscionable contract, option contract, express contract, executory contract, etc.
In this scenario, Consolidated (principal) empowers Doha Ltd., an Egyptian firm to enter into contracts in certain countries on behalf of Consolidated. Thus, this is an agency relationship.
An agency relationship can be defined as a mutual relationship existing between two parties, wherein a principal authorizes the agent to act as the principal's representative or on his behalf (fiduciary role) in dealing with third parties.
Basically, Consolidated is the principal based on the agency relationship while Doha Ltd. is considered to be an agent and as such is authorized or empowered to enter into contracts in certain countries on behalf of Consolidated.
r u itachi
yes if u are no u will die
Answer:
;-;
Explanation:
Answer: Forgive Me Sasuke there wont be a next time
Explanation:
Here are some important figures from the budget of Nashville Nougats, Inc., for the second quarter of 2018:
April May June
Credit sales $322,000 $302,000 $362,000
Credit purchases 130,000 153,000 178,000
Cash disbursements $322,000 $302,000 $362,000
Wages, taxes, and
expenses 44,200 11,200 82,000
Interest 154,000 11,700 11,200
Equipment
purchases 63,200 11,200 0
The company predicts that 5 percent of its credit sales will never be collected, 40 percent of its sales will be collected in the month of the sale, and the remaining 55 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase In March 2017, credit sales were $192,000, and credit purchases were $132,000. Using this information, complete the following cash budget.
April May June
Beginning cash balance $125,000
Cash receipts
Cash collections from credit sales
Total cash available
Cash disbursements
Purchases
Wages, taxes, and expenses
Interest
Equipment purchases
Total cash disburs ements
Ending cash balance
Answer:
Nashville Nougats, Inc.Nashville Nougats, Inc.
Cash Budget for the second quarter of 2018:
April May June
Beginning cash balance $125,000 $(34,000) $99,800
Cash receipts
Cash collections from credit sales 234,400 $297,900 $310,900
Total cash available $359,400 $263,900 $410,700
Cash disbursements
Purchases $132,000 $130,000 $153,000
Wages, taxes, and expenses 44,200 11,200 82,000
Interest 154,000 11,700 11,200
Equipment purchases 63,200 11,200 0
Total cash disbursements $393,400 $164,100 $246,200
Ending cash balance $(34,000) $99,800 $164,500
Explanation:
a) Data and Calculations:
April May June
Credit sales $322,000 $302,000 $362,000
Credit purchases 130,000 153,000 178,000
Cash disbursements:
Wages, taxes, and
expenses 44,200 11,200 82,000
Interest 154,000 11,700 11,200
Equipment purchases 63,200 11,200 0
March April May June
Credit sales $192,000 $322,000 $302,000 $362,000
40% month of sale $128,800 $120,800 $144,800
55% ffg month of sale 105,600 177,100 166,100
Cash collections $234,400 $297,900 $310,900
March April May June
Credit purchases 132,000 130,000 153,000 178,000
Cash payment 132,000 130,000 153,000
You receive $10,000 now for an investment that will give you cash flows of $1000 in one year, $2000 in two years, $3000 in three years, and $4000 in four years. If the discount rate is 5% then what is the PV of this investment
Answer:
$8648.76
Explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Cash flow in year 1 = 1000
Cash flow in year 2 = 2000
Cash flow in year 3 = 3000
Cash flow in year 4 = 4000
I = 5%
PV = $8648.76
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.
3. Press compute
An entity had the following opening and closing inventory balances during the current year: 1/1 12/31 Finished goods $ 90,000 $260,000 Raw materials 105,000 130,000 Work-in-progress 220,000 175,000 The following transactions and events occurred during the current year: $300,000 of raw materials were purchased, of which $20,000 were returned because of defects. $600,000 of direct labor costs were incurred. $750,000 of production overhead costs were incurred. The cost of goods sold for the current year ended December 31 would be A. $1,500,000 B. $1,480,000 C. $1,650,000 D. $1,610,000
Answer:
B. $1,480,000
Explanation:
The computation of the cost of the goods sold is shown below:
Direct material consumed:
beginning Inventory of RM $105,000
Add: Net Purchase ($300,000 - $20,000) $280,000
Total material available $385,000
Less: ending inventory -$130,000
Direct material consumed $255,000
Now
Cost of goods manufactured:
Beginning inventory of Wip $220,000
Current cost:
Direct material $255,000
Direct labor $600,000
Manufacturing OH $750,000
Total current cost $1,605,000
Total cost of WIP $1,825,000
Less: Ending inventory of Wip $175,000
Cost of goods manufactured $1,650,000
Cost of goods sold:
Beginning inventory of FG $90,000
Add: Cost of goods manufactured $1,650,000
Total cost of goods available for sale 1740000
Less: Ending inventory of FG -$260,000
Cost of goods sold $1,480,000
On January 1, 2021. Nana Company paid $100,000 for 6200 shares of Papa Company common stock The ownership in Papa Company is 10%. Nana Company does not have significant influence over Papa Company Papa reported net income of $60,000 for the year ended December 31, 2021. The fair value of the Papa stock on that date was 563 per share. What amount will be reported in the balance sheet of Nana Company for the investment in Papa at December 31 2021?
a. $330,600
b. $315,600
c. $390,600
d. $345.600
Bookmark question for later Overhead allocation based on volume alone: results in facility support costs not being allocated among the various products. is a key aspect of the ABC model. must be used for external financial reporting. will systematically overcost high-volume products and undercost low-volume products.
Answer:
will systematically overcost high-volume products and undercost low-volume products.
Explanation:
Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.
An overhead allocation that is typically based on volume alone, will systematically overcost the high-volume products that are also complex and undercost low-volume products that are simple in nature.
Assume that a country with an open economy has a fixed exchange-rate system and that its currency is currently overvalued in the foreign exchange market. Which of the following must be true at the official exchange rate?
a. The quantity of the country's currency supplied is less than the quantity demanded.
b. The quantity of the country's currency supplied exceeds the quantity demanded.
c. the demand curve for the country's currency is horizontal.
d. The supply curve for the country's currency is horizontal.
e. The domestic interest rate is equal to the interest rate in that of the world.
Answer: b. The quantity of the country's currency supplied exceeds the quantity demanded.
Explanation:
A country operating a fixed-exchange rate system would be actively trading its currency to ensure that it remains at a certain rate. If the currency is overvalued, it means that the currency is actually weak and is being propped up by the company's actions in the forex market.
A reason for the weakness would be that the supply is higher than the demand of the currency which means that, as per the rules of supply and demand, the currency is trading at a lower price, i,e., it is weak.
Margaret sells hand-knit scarves at a flea market. Each scarf sells for $25. Margaret pays $30 to rent a vending space for one day. The variable costs are $15 per scarf. How many scarves should she sell each day in order to break even?
Answer:
The answer is 3 units
Explanation:
Break even sale is the amount of sales a firm or business needs to sell to break even , that is, the amount to sell to neither make profit nor loss.
Break even sales = Fixed cost ÷ ( unit sales - variable costs)
$30/($25 - $15)
$30/$10
=3 units
Break even sales is 3 units. That means Margaret needs to 3 units of hand-knit scarves to neither make profit or loss. Units above 3 will result into profit making while units below 3 will result into loss making.
Discussion Week 3 х + -mccneb.edu/courses/16958/discussion_topics/147424 The second posting provides students an opportunity to interact with one another, simulating classroom discussion, with respect to the postings of others. This response should include a critical and respectful review of other postings. The second posting must be no less than 200 words in length to be considered for grade assessment. Any posting less than 200 words in length will not be reviewed and a grade of -- will be assigned. Subsequent postings (in addition to the aforementioned first and second posting) are invited. There is no length requirement for subsequent postings. Please note, attachments will not be opened or reviewed for grade consideration Any postings after the due date has past will not be considered for grading. Discussion 3: Please explain the difference between express and implied easements giving an example of each. Then tell us, if you wanted to know if there was ar easement that involved a property, what are the ways you could find out - i.e. where would you look and what would you look at? Then discuss the importance o implied easements to our society and provide an example. Search entries or author Unread Subscrib Reply Brianna Ferrero Sunday An express easement is created by an agreement or document, it must be in writing. For example, one neighbor may want to build a parking pad or basketball court off their driveway, but not have enough room on their lot to do so because their driveway already butts up against the property line. This individual may offer to pay the neighbor for his consent to grant an express easement for them to build a parking pad and a basketball court off their driveway that extends or the neighbors land.
aAnswer:ya
Explanation:ya
You are in a line at the bank drive-through and 9 cars are in front of you. You estimate that the clerk is taking about four minutes per car to serve.How long do you expect to wait in line?
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $24,800 at the end of this year and subsequent payments that will grow at a rate of 3.5 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity
Answer:
PV= $450,909.1
Explanation:
Giving the following information:
Cash flow (Cf)= $24,800
Growth rate (g)= 3.5%
Discount rate (i)= 9%
To calculate the present value, we need to use the following formula:
PV= Cf / (i - g)
PV= 24,800 / (0.09 - 0.035)
PV= 24,800 / 0.055
PV= $450,909.1
what's is the difference between external dimensions and internal dimensions fators
Answer:
Internal Environment dimension refers internal conditions with a business or organization that effect its growth and working such as employees, machinery, working hours, funds etc.
Extern Environment dimension refers external conditions that effect business or organization growth and working such as organization's performance, profitability, and functionality
Explanation:
Internal Environment dimension refers internal conditions with a business or organization that effect its growth and working such as employees, machinery, working hours, funds etc.
Extern Environment dimension refers external conditions that effect business or organization growth and working such as organization's performance, profitability, and functionality
The individual assets invested by a partner in a partnership Group of answer choices revert back to that partner if the partnership liquidates. determine that partner's share of net income or loss for the year. are jointly owned by all partners. determine the scope of authority of that partner.
Answer:
Partners have equal rights in a partnership group.
Explanation:
Net income and losses are distributed equally to all partners in a partnership group.
The government has imposed a fine on the Imperial Company. The fine calls for annual payments of $100,000, $250,000, and $250,000, respectively over the next three years. The first payment is due one year from today. The government plans to invest the funds until the final payment is collected and then donate the entire amount, including investment earnings, to a national health center. The government will earn 3.5% on the funds held. How much will the national health center receive three years from today
Answer: $615,872.50
Explanation:
The amount the National Health Center will receive is the sum of the future values, 3 years from now, of the annual payments of the fines.
Future value of $100,000 paid 1 year from today:
= 100,000 * (1 + 3.5%)²
= $107,122.50
Future value of $250,000 paid 2 years from now:
= 250,000 * (1 + 3.5%)
= $258,750
Future value of $250,000 paid 3 years from today:
= $250,000
Total is:
= 107,122.50 + 258,750 + 250,000
= $615,872.50
Shelton Company has the following account balances at year-end:
Accounts receivable $140,000
Allowance for doubtful accounts 7,200
Sales discounts 4,800
Shelton should report accounts receivable at a net amount of:__________
a. $120,000.
b. $ 12,800.
c. $1 08,000.
d. $115,200
Answer:
See below
Explanation:
Given the above information, Shelton should report the account receivable at a net amount as computed below;
= Accounts receivables - Allowance for doubtful account
Accounts receivables = $140,000
Allowance for doubtful account = $7,200
= $140,000 - $7,200
= $132,800
Therefore, account receivables at a net amount is $132,800
Isabel, a human resources assistant, wants to conduct safety training for employees. So, she's creating a graphic to inform employees about the
location of fire extinguishers, emergency exits, and fire alarms on each floor of the building. Which type of graphic is best for Isabel to use?
A map
B. table
C. scatterplot
D. circle graph
Answer:
I think its C if it's not then sorry
Answer:
map?
Explanation:
because it says location
An investment opportunity requires a payment of $910 for 12 years, starting a year from today. If your required rate of return is 6.5 percent, what is the value of the investment to you today
Answer:
PV= $7,424.44
Explanation:
Giving the following information:
Annual payment (A)= $910
Number of periods (n)= 12 years
Rate of return (i)= 6.5%
To calculate the value of the investment today (PV), we need to use the following formula:
PV= A*{(1/i) - 1/[i*(1 + i)^n]}
PV= 910*{(1/0.065) - 1/ [0.065*(1.065^12)]}
PV= $7,424.44
Suppose that the average wage earner saves 3% of her take-home pay and spends the other 97%. Also suppose that 97% of any amount spent is always re-spent (with 3% saved). Estimate the impact that a proposed $35 billion tax cut will have on the economy over the long run due to the additional spending generated. (Round your answer to the nearest integer.)
Answer:
A proposed $35 billion tax cut will make $1,132 billion to be circulated through the economy over the long run due to the additional spending generated.
Explanation:
MPS = Marginal propensity to save = Average wage earner saves = 3%, or 0.03
MPC = Marginal propensity to consume = Average wage earner spends = 97%, or 0.97
Tax multiplier = - MPC/MPS = - 0.97/0.03 = - 32.3333333333333
Tax cut = - $35 billion
Impact of $35 billion tax cut = Tax multiplier * Tax cut = (- 32.3333333333333) * (- $35 billion) = $1,132 billion
Therefore, a proposed $35 billion tax cut will make $1,132 billion to be circulated through the economy over the long run due to the additional spending generated.
Javier computer services began operations in July 2017. At the end of the company prepares monthly financial statements. It has the following information for the month.
a. At July 31, the company owed employees $1,800 in salaries that the company will pay in August.
b. On July 1, the company borrowed $40,000 from a local bank on a 10-year note. The annual interest rate is 12%.
c. Service revenue unrecorded in July totaled $3,000.
Required:
Prepare the adjusting entries needed at July 31, 2017.
Answer and Explanation:
The adjusting entries are shown below:
a. Salaries expense Dr $1,400
To Salaries payable $1,400
(being salaries expense is recorded)
b. Interest expense ($40,000 × 12% × 1 ÷12) $400
To interest payable $400
(being interest expense is recorded)
c. Account receivable Dr $3,000
To Service revenue $3,000
(being revenue is recorded)
These 3 entries should be recorded
A firm has forecasted sales of $4,500 in April, $3,000 in May, and $5,000 in June. All sales are on credit. 30% is collected in the month of the sale, and the remainder in the following month. What will be the balance in accounts receivable at the end of June
Answer:
$3,500
Explanation:
Calculation to determine What will be the balance in accounts receivable at the end of June
Balance in accounts receivable =June Forecasted sales* (Remaining percentage-Percentage collected)
Let Plug in the formula
Balance in accounts receivable =$5,000*(100%-30%)
Balance in accounts receivable=$5,000*70%
Balance in accounts receivable=$3,500
Therefore the balance in accounts receivable at the end of June will be $3,500
The CAPM is a theory of the relationship between risk and return that states that the expected risk premium on any security equals its beta times the market return.a. Trueb. False
Answer:
a. True
Explanation:
As we know that
Under CAPM, the cost of the capital is
= risk free rate of return + beta × (market rate of return - risk free rate of return)
= risk free rate of return + beta × market risk premium
So it shows the relationship between the risk and return on which the expected risk premium equivalent to the beta and the same should be multiplied with the market return
Therefore the given statement is true
Ignoring possible tax effects and signaling costs, the total value of a firm's equity remains the same irrespective of how the firm distributes its residual earnings-dividends or stock repurchases. Each distribution method has certain advantages and disadvantages.
Based on your understanding of dividends and stock repurchases, select the best terms to go with the statements.
Select the best term to complete the sentence Sell Buy
Repurchases give stockholders a choice to ???? their stock and realize their capital gains or keep their stock and receive future dividends. False True
Repurchases allow a firm to buy back as much stock as it wants, at whatever price it wants, without affecting shareholders. This statement is ???? True False
Dividends provide signals about a firm's future prospects, whereas some investors might misinterpret why a firm is repurchasing stock. This statement is???? Saves Increases
Repurchase transactions allow a firm to buy back stock that may be needed to fulfill obligations when employees exercise their stock options. This ???? the costs associated with issuing new shares.
Answer:
The Total Value of a Firm's Equity and Distribution Methods:
1. Repurchases give stockholders a choice to sell their stock and realize their capital gains or keep their stock and receive future dividends. False True
2. Repurchases allow a firm to buy back as much stock as it wants, at whatever price it wants, without affecting shareholders. This statement is False.
3. Dividends provide signals about a firm's future prospects, whereas some investors might misinterpret why a firm is repurchasing stock. This statement is True.
4. Repurchase transactions allow a firm to buy back stock that may be needed to fulfill obligations when employees exercise their stock options. This saves the costs associated with issuing new shares.
Explanation:
Dividends and stock repurchase are two methods of distributing net earnings by a company. Both methods reduce the equity balance by decreasing the Retained Earnings, which are components of the Stockholders' Equity. Stock repurchase is usually embarked upon by management when it wants to reduce the number of outstanding shares, increase both the demand for the shares and the price, and boast the Earnings Per Share.
