Educational material from 
What you will learn
- Track buyback cash expenditure and cancelled shares separately.
- Calculate a remaining owner’s percentage before and after.
- Distinguish higher EPS from higher total profit and cash payments to everyone.
Build the share pile and a separate cash record
Allow around 25 minutes. Lay out 50 tokens, each representing ten shares. There are 500 shares in total and company cash of SEK 4,000. Mark two tokens as one owner’s 20 shares. An event card says the company completes a repurchase of 100 other shares at SEK 12 each and then cancels them.
The owner with 20 sells nothing. Repurchase and cancellation happen before a new complete model period. Profit attributable to ordinary shareholders is supplied as SEK 1,000 in both the earlier and the new equally long period. There are no fees, taxes, interest differences, other share classes or further share events. Unchanged profit is a chosen condition rather than a forecast.
If the table does not fit, scroll it sideways.
| Item | Before | After |
|---|---|---|
| Shares | 500 | 400 |
| Company cash, SEK | 4,000 | 2,800 |
| Owner’s shares | 20 | 20 |
| Ownership | 4 % | 5 % |
| Supplied complete-period profit, SEK | 1,000 | 1,000 |
| Earnings per share, SEK | 2 | 2.5 |
Move the money and remove the correct tokens
The repurchase costs 100 × 12 = SEK 1,200. Move the cash card to the selling owners and record cash of 2,800. Then remove ten tokens when cancellation is completed according to the card. Forty tokens, and thus 400 shares, remain. Give the money movement and share-count change separate checking lines.
H&M’s dated announcement of 29 May 2026 describes completed cancellation of repurchased shares. It illustrates why an event’s status needs identifying; our own card uses different fictional numbers. An announced programme is different evidence from a completed event, and not every real buyback automatically means immediately registered cancellation.
Calculate retained ownership and EPS
The owner’s 20 shares represent 20 / 500 = 4 percent before and 20 / 400 = 5 percent afterwards. This owner receives no buyback payment in our case because none of these shares is sold. The percentage changes through fewer shares in the denominator, rather than the owner receiving ten additional shares.
EPS moves from 1,000 / 500 = SEK 2 to 1,000 / 400 = SEK 2.50 in two complete model periods with their respective share counts. Total profit remains 1,000. The public IAS 33 overview identifies a period-weighted count; we therefore place the event before the next complete period. A mid-period repurchase needs different timing evidence.
Defend two correct and two incorrect statements
Offer the statements The owner receives SEK 1,200, The owner holds five percent afterwards, Company profit has risen and EPS has risen in the model period. The two errors to identify are a payment to an owner who does not sell and a supposed increase in total profit. Assess whether students show the relevant denominator and cash recipient.
The next share quote is unspecified and cannot be calculated from the tokens. Use company search for the product connection and the EPS lesson for concept support. Cash records and tokens are a manual classroom activity requiring no buyback analysis or automatic EPS calculation in Investiq. Keep the period simplifications attached when the group presents its answer.
Try it yourself
A new company has 800 shares, cash of SEK 5,000 and supplied profit of SEK 1,400 in two equally long complete model periods. Before the second, 100 shares are bought back and cancelled at SEK 15 each. An owner retains 28 shares. Calculate new cash, share count, EPS and ownership.
Show the solution and explanation
Cash becomes SEK 3,500 and 700 shares remain. EPS moves from SEK 1.75 to SEK 2. Ownership moves from 3.5 to 4 percent; the owner receives no buyback payment.
100 × 15 = 1,500; 5,000 − 1,500 = 3,500. 1,400 / 800 = 1.75 and 1,400 / 700 = 2. The owner’s 28 / 800 and 28 / 700 give the percentages.
Check your understanding
Has total profit risen when EPS moves from 2 to 2.50 in the main case?
No. Total profit is supplied as the same SEK 1,000 in both model periods.
Can an announced programme alone be recorded as the card’s completed cancellation?
No. The card requires completed repurchase and cancellation.
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More activities on this topic
Instruments, trading and valuation
- Match stock cards in the classroom: company, share class and venue
- A classroom trading tape: count shares, executions and traded value
- Build a classroom capital bridge: share price, market cap and EV
- Audit P/S claims in the classroom: sales, margins and periods
- Share days on a timeline: a classroom weighted-share activity
Sources and examples
- H&M, 29 May 2026: completed cancellation of repurchased shares
- IFRS Foundation: public IAS 33 overview and period-weighted shares
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
