RE:RE:RE:RE:RE:BTE LEVEL 2 - WALL MOVED TO $5.41dllscwbysfn, OK the following is what I've learned so far: Total Assets = Liabilities + Shareholder's Equity. For a given amount of liabilities, when you reduce total assets by say $1000 then you reduce shareholders equity by $1000.
So shareholder's equity = total assets - liabilties. Say you start with $2000 in total assets and $1000 in liabilities so shareholder's equity is $2000 - $1000 = $1000. Say there's 1000 shares. So each share is worth $1000/1000 shares = $1 per share.
Now say you buy back 500 shares using $500 of your total assets. Now you have sharholders equity = $1500 - $1000 = $500. So each share is worth $500/ 500 shares = $1 per share. No change. I have never understood how buying back shares increases the share price. But then I am just learning this stuff.