Why might a company choose to buy back its own shares as treasury shares?

When a company chooses to buy back its own shares as treasury shares, the primary motivation is often related to financial strategy and market perception. The correct answer highlights that the company may be seeking a favorable opportunity when the market price of its shares is low.

By repurchasing shares at a lower price, a company can effectively reduce the number of outstanding shares in circulation, which can lead to an increase in earnings per share (EPS). When there are fewer shares outstanding, the earnings attributable to each remaining share can increase, potentially boosting the stock price and providing value to shareholders.

Additionally, reducing the number of outstanding shares can signal to the market that the company believes its stock is undervalued, which may enhance investor confidence. Share buybacks can also provide a way for companies to invest in themselves if they have excess cash and see better opportunities in their own equity compared to other investments.

The other options present various scenarios that do not align with the typical intentions behind share buybacks. For instance, increasing the total number of outstanding shares contradicts the purpose of a buyback, while decreasing market demand could negatively impact the share price rather than enhance it. Lastly, enhancing the company's liabilities is not a goal of share repurchases; rather, companies aim to