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Does stock buyback affect Retained Earnings account in the balance sheet?
I have a question about accounting. Does stock buyback affect Retained Earnings account in the balance sheet?
Yes, stock buyback can affect Retained Earnings account. When a company buys back its own stock, the amount spent shows up as a reduction in the amount of cash and an increase in the amount of treasury stock. This reduces the amount of outstanding shares and increases the value of each remaining share, which, in turn, can increase the company's earnings per share and eventually, the retained earnings.