Final answer:
The repurchase of stock decreases the net cash used by financing activities on the statement of cash flows, representing a return of capital to shareholders.
Step-by-step explanation:
The repurchase of stock by a company is recorded as a cash outflow on the statement of cash flows, more specifically under the financing activities section. This action represents the company's return of capital to shareholders, thereby reducing the company's equity.
In the statement of cash flows, a stock repurchase decreases the net cash provided by (or increases the net cash used by) financing activities, which reflects the outflow of cash to buyback the shares. It does not affect the net cash used by investing activities, as those are related to long-term assets. Companies may choose to repurchase stock for various reasons, including to signal confidence in the company's prospects or to adjust the capital structure.