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

1.Increases your Earnings Per Share dramatically

2.Increases your Return on Equity dramatically

3.Will have higher dividends for less Cash Per Share

4.Thus Your share price shoots up because of your higher EPS, RoE and dividends

 

Example:

  • 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 buyback 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

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