Casual_Investor,
In all companies
assets = liabilities + owners equity
so in millions the OZ Minerals case
so if net assets are 7,927.1
liabilties are 1,462.1
and owners equity is 6,465.0
7,927.1 = 1,462.1 + 6,465.0
if the shares are $1.90 each then roughly 3402 mill shares means book value per share is 7,927.1/3402
= $2.33 per share
after a 1 bill buyback
so if net assets are 6,927.1
liabilties are 1,462.1
and owners equity is 5,465.0
6,927.1 = 1,462.1 + 5,465.0
if the shares are $1.90 each then roughly 2876 mill shares means book value per share is 6,927.1/2876
= $2.41 per share
An increase in book value of 8cents a share.
Combine this book value increase with the restricted supply of the shares as calculated previously an increase of from 1.90 to 2.54 of 64 cents.
The laws of supply and demand is not a theory but real.
Both of these increases in book value and restricted supply would result in a share price increase unless other market facters that would drive the the stock price down anyway play a part.
The market capitalisation does not change because no value is destroyed by performing a share buy back. There is still the same amount of total market value chasing fewer shares.
When a company reduces the amount of shares outstanding by declaring a stock buy back program, each of your shares becomes more valuable and represents a greater percentage of equity in the company.
- Forums
- ASX - By Stock
- a share buy back
Casual_Investor,In all companiesassets = liabilities + owners...
-
- There are more pages in this discussion • 38 more messages in this thread...
You’re viewing a single post only. To view the entire thread just sign in or Join Now (FREE)
Featured News
Add OZL (ASX) to my watchlist
Currently unlisted public company.
The Watchlist
MTL
MANTLE MINERALS LIMITED
Nick Poll, Executive Director
Nick Poll
Executive Director
SPONSORED BY The Market Online