| | Treasury stock - Wikipedia, the free encyclopedia |
 | | After buyback, the company can either retire the shares (however, retired shares are not listed as treasury stock on the company's financial statements) or hold the shares for later resale. |
 | | If the market fairly prices a company's shares at $50/share, if a company buys back 100 shares for $5000, it now has $5000 less cash but there are 100 fewer shares outstanding; the net effect should be that the value per share is unchanged. |
 | | However, buying back shares does improve certain per-share ratios, such as price/earnings (earnings per share is increased due to fewer shares outstanding), but that's only because valuing a company's shares according to those ratios is not accurate when a company is holding a lot of cash. |
| en.wikipedia.org /wiki/Treasury_shares (623 words) |