Answer (C) is correct . A firm’s net profit margin is its net income divided by net sales. Both figures are derived from the income statement and are thus unaffected by a purchase of treasury stock.
Answer (A) is incorrect because A purchase of treasury stock changes a firm’s capital structure and thus affects the debt to equity ratio.
Answer (B) is incorrect because A purchase of treasury stock changes a firm’s capital structure and thus affects earnings per share.
Answer (D) is incorrect because A purchase of treasury stock requires the outlay of cash and thus affects the current ratio.
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