Casey Communications Recently Issued New Common Stock and Used the Proceeds

question 59

Multiple Choice

Casey Communications recently issued new common stock and used the proceeds to pay off some of its short-term notes payable. This action had no effect on the company's total assets or operating income. Which of the following effects would occur as a result of this action?

• A) The company's current ratio increased.
• B) The company's times interest earned ratio decreased.
• C) The company's basic earning power ratio increased.
• D) The company's equity multiplier increased.
• E) The company's debt ratio increased.

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Definitions:

Restraint

The act of controlling, limiting, or holding back actions or responses, often to maintain discipline or adhere to rules.

Document Design

The process of creating a document layout that effectively communicates its content to the reader.

Typeface

The physical design of letters, numbers, and other text characters (font and typeface are often used interchangeably, although strictly speaking, a font is a set of characters in a given typeface).

Margins

The blank spaces surrounding the text on a page or the difference between the cost and selling price of goods or services.