I have read that a stock repurchase alter the company’s capital structure by decreasing the percentage equity.
But how does a stock repurchase decrease equity??? I buy stocks from other stockholders and keep it within the company. So equity does not change.
When a company repurchases its own stock, its assets decrease by the amount of cash it spends, and its equity decreases; the stock it repurchases is not shown as an asset, but as a contra equity: Treasury stock.
Liabilities remain unchanged, so the capital structure changes.
ok, that make sense!.
Always a great help S2000 magician.
Thank you.
You’re welcome.