What Would Happen to the Debt-To-Assets Ratio, If at the End

question 7

Multiple Choice

What would happen to the debt-to-assets ratio, if at the end of 2012, the company borrowed $1,000 from the bank by signing a promissory note and received $2,000 from the issuance of stock?

• A) This transaction would cause the debt-to-assets ratio to increase.
• B) This ratio would increase indicating a less risky financing strategy.
• C) The debt-to-assets ratio would not change because this transaction would not be
• D) recorded until 2013.
• E) This ratio would have increased even if this transaction had not occurred.

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