Question

What is the purpose of purchasing Treasury Stock?

1) OI: Inflow of Cash from Operating Activities
2) OO: Outflow of Cash From Operating Activities
3) II: Inflow of Cash from Investing Activities
4) IO: Outflow of Cash from Investing Activities
5) FI: Inflow of Cash from Financing Activity
6) FO: Outflow of Cash from Financing Activities

Answer 1

The purpose of purchasing Treasury Stock is not listed as one of the options provided. Treasury stock is repurchased by a company and kept in its own treasury for various reasons, including signaling confidence, distributing excess cash, increasing earnings per share, and preventing a hostile takeover.

Step-by-step explanation:

The purpose of purchasing Treasury Stock is not listed as one of the options given. Treasury stock refers to shares of a company's own stock that it has repurchased and kept in its own treasury. The reasons for a company to repurchase its own stock may vary, but some common purposes include:

1. to signal confidence in the company's financial strength and future prospects
2. to distribute excess cash to shareholders
3. to increase earnings per share by reducing the number of outstanding shares
4. to prevent a hostile takeover