Impact of Share Repurchase on Financial Ratios

A large multinational corporation has decided to return capital to its shareholders by opting for a share repurchase program instead of declaring a dividend increase. The company's decision is anticipated to have an impact on its financial ratios. Consider the following scenarios:

The company reports a share repurchase of $1 million which results in a reduction of its outstanding shares from 1 million to 900,000 shares. This repurchase will be reflected in the financial metrics of the firm and is designed to optimize shareholder value. Analyze the implications of this decision on some key financial ratios.