Question
The company has grown rapidly during the last 10 years of operations. As its segment of the industry has begun to mature, though, the fast
The company has grown rapidly during the last 10 years of operations. As its segment of the industry has begun to mature, though, the fast growth of previous years has begun to slow. Assume that the last financial reporting (10k) shows revenues and profits that are roughly the same as previous years report. Further assume your group was the board members for the company. During your meeting, it was recommended that it is time for a share buyback program instead of issuing the bonds and using the funds for the expansion. One of your group members argued that you can always issue more bonds next year, but right now, you will need a quick fix for the EPS numbers. By now, the companys shareholders are accustomed to increases every year. How are buyback of shares provide a quick fix for EPS? Would it be ethical for companies to implement share buybacks instead of expansion? Who would be affected if the proposal is implemented?
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