What is the primary impact of a share repurchase on earnings per share (EPS)?

A share repurchase primarily impacts earnings per share (EPS) by decreasing the total number of outstanding shares in the market. When a company buys back its own shares, it reduces the supply of shares available to investors. Although the net income of the company may remain constant in the short term, the earnings are now distributed over a smaller number of shares, which can lead to an increase in EPS.

As EPS is calculated by dividing the net income by the number of outstanding shares, reducing the share count while keeping net income steady results in a higher EPS. This can also enhance the attractiveness of the stock to investors, as a higher EPS may signal improved profitability on a per-share basis.

In contrast, increasing the share count, as suggested in the other options, generally has a dilutive effect on EPS. Increasing net income alone does not guarantee an increase in EPS if the number of shares also rises significantly. Therefore, the correct reasoning behind the primary impact of a share repurchase on EPS aligns with option A.