Nolan is in favor of a share repurchase. He argues that a repurchase will increase the company’s P/E ratio, return on assets, and return on equity. Are his arguments correct? How will a share repurchase affect the value of the company?

Answer 1

IF Price/share and Earnings per Share are based on outstanding shares, how can repurchase affect P/E, as both are changed the same by changing number of shares.