Why would a company buyback its own stock?

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The buyback of shares allows a company to invest in itself and offers various benefits for such investment. A company opts for a buyback to avail the below advantages of purchasing its own stock.

  1. The buyback reflects a healthy financial status of a company.
  2. The buyback helps a company to consolidate its ownership.
  3. The buyback helps the share prices to boost. In the case of slow-moving markets, buyback helps support and preserve the stock value.
  4. The buyback tends to improve the Key financial ratios and enhance the shareholder value.
  5. The buyback is an effective way to utilize the ideal free capital that helps boost shareholder's confidence in the company.
  6. The buyback acts as a tool to achieve the optimum debt-equity ratio for a company by repurchasing the required equity from the market.


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