If a Company Negotiates a Deal with Creditors to Exchange

question 136

Multiple Choice

If a company negotiates a deal with creditors to exchange debt for stock,its:

• A)net profit margin ratio will increase.
• B)asset turnover ratio will increase.
• C)debt-to-assets ratio will decrease.
• D)debt-to-assets ratio will remain unchanged.

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Definitions:

Retained Earnings

The portion of net income that is retained by the corporation rather than distributed to its owners as dividends.

Date of Payment

Refers to the specific day on which a payment is to be made or received, often relating to bills, debts, or other financial obligations.

Board of Directors

A group of individuals elected by the shareholders of a company to oversee and guide its management and strategies.

Treasury Stock-Common

Refers to shares that were issued and later reacquired by the issuing company, reducing the amount of outstanding stock on the open market.