>> Accounting Basics
When companies experience a profitable quarter, the board of directors may discuss the option of returning a portion of those profits back to the stockholders through the process of raising dividends. Another option the board may choose is a repurchase stock option and place the shares into treasury stock. What will likely happen to the stock price should the board raise dividends? What will likely happen to the stock price, should the board repurchase market shares of the company stock? What effect would these transactions have on the equity section of the financial statements?