If Equal Amounts Are Added to the Numerator and the Denominator

question 267

Multiple Choice

If equal amounts are added to the numerator and the denominator of the current ratio and the ratio is over one, the ratio will always

• A) increase.
• B) decrease.
• C) stay the same.
• D) equal zero.

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Definitions:

Earnings Per Share

A company's net profit divided by the number of its common shares outstanding, indicating the profitability on a per-share basis.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Financing Alternatives

Different options available for a business or individual to fund their activities, including loans, equity investments, and leasing.

Debt to Assets Ratio

A financial metric indicating the proportion of a company's assets that are financed by debt, offering insights into financial leverage.