Buy Back Shares Early- Debt Financing
Buying back shares is one of the only “tips” you can do in the game that will instantly guarantee you a higher score because it increases almost every metric you’re graded on
- Increases your Earnings Per Share dramatically
- Increases your Return on Equity dramatically
- Will have higher dividends for less Cash Per Share
- Thus Your share price shoots up because of your higher EPS, RoE, and dividends
- If your net profit was $25M in Year 8 and you had 10M shares of stock outstanding, your EPS would be $2.50. (25M/10M = 2.50) •If you’ve bought back your 2.5M shares in year 7, you would have 7.5M million shares outstanding and your EPS would jump to $3.33 in year 8. (25M/7.5M=3.33)
- Roughly a 40% jump in EPS.
You Want To Do It Early Because
- The game limits how much stock you can buy back a year. This must be an ongoing endeavor.
- If you’re following the right strategies, your stock price is going to skyrocket.
- It isn’t cost-effective to buy shares in the later years as theoretically your shares price is higher than it was in the earlier years