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? $$\begin{array} { c c c c } & \text { Increase } & \text { Times interest earned } & \text { Financial leverage ratio } \\\text { A) }& \text { Increase } & \text { Increase } & \text { Increase } \\\text { B) } & \text { Increase } & \text { No effect } & \text { Increase } \\\text { C) } & \text { No effect } & \text { No effect } & \text { No effect } \\\text { D) }& \text { No effect } & \text { No effect }\end{array}$$

Grasp the importance of solvency, liquidity, leverage, and profitability in assessing a company's financial health.

Understand various financial ratios and their roles in measuring company performance and solvency.

Calculate and assess the times interest earned ratio to analyze a company's ability to meet its interest obligations.

Analyze a company's liquidity through current ratio calculation and understand its significance.

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Definitions:

Retinal Disparity

A binocular cue for perceiving depth based on the fact that the two eyes view the world from slightly different angles, creating a disparity that the brain interprets as depth.

Precognition

The phenomenon of knowing or sensing something before it happens, often associated with psychic abilities.

High Need

A strong requirement or desire for something, which could be physical, emotional, or psychological.

Power

The ability or capacity to influence, direct, or control the behavior of others or the course of events.