Below Is Selected Data for Gertup Corporation as of 12/31/05

question 56

Multiple Choice

Below is selected data for Gertup Corporation as of 12/31/05:
$$\begin{array} { l r } \text { Total assets } & \$ 5,500 \\\text { Current assets } & 2,750 \\\text { Long-term debt } & 450 \\\text { Current ratio } & 2.5 \\\text { Inventory } & 1,500 \\\text { For year ended 12/31/05 } & \\\text { Sales } & \$ 18,500 \\\text { Cost of goods sold } & 14,800\end{array}$$
-Gertup has increased its borrowing since last year, in part to finance the increased credit terms offered to customers. Which of the following actions would not decrease its borrowing?

• A)Decrease dividends paid
• B)Increase profit margin
• C)Change from LIFO to FIFO for inventory cost purposes
• D)Replace cash dividends with stock dividends

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Definitions:

Profit Margins

The difference between the cost to produce a good or service and its selling price, expressed as a percentage of the selling price, indicating financial health.

American Manufacturers

refers to businesses and individuals involved in the production of goods within the United States, contributing to the country's industrial and economic growth.

Foreign Locations

refers to places outside one's own country, often implying a context of international affairs or travel.

Eagle Forum

A conservative interest group in the United States, known for its advocacy on social issues.