All Other Things Being Equal, If a Company Issues a 1

question 60

Multiple Choice

All other things being equal, if a company issues a 1% stock dividend, what is the effect on the following ratios? $$\begin{array} { c c c c } & \text { Increase } & \text { Times interest earned } & \text { Financial leverage ratio } \\\text { A) }& \text { Increase } & \text { Increase } & \text { Increase } \\\text { B) } & \text { Increase } & \text { No effect } & \text { Increase } \\\text { C) } & \text { No effect } & \text { No effect } & \text { No effect } \\\text { D) }& \text { No effect } & \text { No effect }\end{array}$$

---

Definitions:

Profit Center

A branch or division of a company that is directly responsible for generating its portion of the company's overall profit.

Profit Center

A branch or division of a company that is treated as a separate unit for the purpose of calculating its profitability.

Cost Center

A business unit or department that incurs expenses but does not directly generate revenues, often evaluated for its efficiency and cost management.

Profit Center

A segment or branch of a company that is directly responsible for generating profit through its operations and is evaluated on its profitability.