Originally published: 20/06/2016 14:28
Publication number: ELQ-78066-1

Effect of a buyback on Earnings per Share (EPS) and Value

Assess how a buyback will affect EPS and Value

by Prof. Aswath Damodaran
Professor at NYU Stern School of Business

with NYU Stern School of Business
An Education in Possible

5 reviews251 views|Start the discussion!|download for free

value finance buyback earnings per share eps effects consequences

Description
This excel model enables you to assess how a buyback will affect earnings per share and make judgments on its consequences for overall value and value per share.

Note: this model is being shared with the authorization of Professor Aswath Damodaran from NYU Stern Business School (www.damodaran.com)

This Best Practice includes
1 Excel Model File

Prof. Aswath Damodaran offers you this Best Practice for free!

download for free

Add to bookmarks

Discuss

Further information

Objectives

The objective of this model is to get the following output values:

Value Impact
Pre-buyback vs post-buyback
- beta
- Debt to Equity Ratio
- Debt to Capital Ratio
- Cost of equity
- After-tax cost of debt
- Cost of capital
- Enterprise value
- Firm value
- Debt outstanding
- Equity value
- Number of shares
- Price/share

Value Transfer (pre-buyback)
- value per share pre-buyback (if available)
- price on buyback
- number of shares bought back
- value transfer to remaining shareholders
- remaining shares
- value transfer per remaining share
- price per share with value transfer