Delivery to your home or office Monday to Saturday FT Weekend paper — a stimulating blend of news and lifestyle features ePaper access — the digital replica of the printed newspaper. Team or Enterprise Premium FT. Pay based on use. Does my organisation subscribe? Group Subscription. Premium Digital access, plus: Convenient access for groups of users Integration with third party platforms and CRM systems Usage based pricing and volume discounts for multiple users Subscription management tools and usage reporting SAML-based single sign-on SSO Dedicated account and customer success teams.
How is this sustainable? Merck insists it must keep drug prices high to fund new research. Finally, consider the executives at Applied Materials, a maker of semiconductor-manufacturing equipment.
As is the case at many companies, its CEO receives incentive pay based on certain metrics. One is earnings per share, or EPS, a widely used barometer of corporate performance. Normally, EPS is lifted by improving earnings. But EPS can be easily manipulated through a stock buyback, which simply reduces the denominator—the number of outstanding shares.
At Applied Materials, earnings declined 3. Yet the company still managed to eke out EPS growth of 1. In part, by taking more than 10 percent of its shares off the market via buybacks. That move helped executives unlock more incentive compensation—which, these days, usually comes in the form of stock or stock options.
Corporations offer a variety of justifications for the practice of repurchasing stock. Another argument: Some companies just make more money than they can possibly put to good use. This likewise has a smidgen of truth. Though, if this were the real reason companies are repurchasing stock, it would imply that biotechnology, banking, and big retail—sectors that hold some of the biggest practitioners of buybacks—are nearing a dead end, idea-wise.
Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is also not a registered tax financial adviser under the Tax Agent Services Act and you should seek tax advice from a registered tax agent or a registered tax financial adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.
Hamburger Menu Dialog Open. CommBank Search. Dialog start. Search CommBank. In turn, these corporations are more likely to expand operations or spend on research and development. These activities lead to increased hiring and income. For individuals, improvements in the household balance sheet enhance chances they leverage up to borrow to buy a house or start a business.
Securities and Exchange Commission. PR Newswire. Board of Governors of the Federal Reserve System. Accessed July 31, Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
These choices will be signaled globally to our partners and will not affect browsing data. We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. Key Takeaways Companies do buybacks for various reasons, including company consolidation, equity value increase, and to look more financially attractive.
The downside to buybacks is they are typically financed with debt, which can strain cash flow. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts.
0コメント