Outstanding Equity

torpedo475

New Member
Hindi
Hi,
While going through bussiness related article I came across the following line.
"A corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity."
I will be thankful if you can guide me to understand the underlined part.
 
  • MuttQuad

    Senior Member
    English - AmE
    Hi,
    While going through bussiness related article I came across the following line.
    "A corporation can repurchase its own stock by distributing cash to existing shareholders in exchange for a fraction of the company's outstanding equity."
    I will be thankful if you can guide me to understand the underlined part.
    The company's outstanding equity consists of shares of its stock held by the investing public (existing shareholders). The sentence describes an action by which the company will buy back from shareholders a small portion of the outstanding shares by paying cash for them. This is quite common among companies who have excess cash and wish to raise the value of the shares left outstanding after the partial buy-back.
     
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