​Which of the Following Is the Effect of Issue of Additional

question 110

Multiple Choice

​Which of the following is the effect of issue of additional common stock by a company on its liquidity and profitability metrics?

• A) ​Its profitability increases.
• B) ​Its profitability and liquidity increase.
• C) ​Its profitability and liquidity remain unaffected.
• D) ​Its liquidity increases.

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Definitions:

Fixed Manufacturing Cost

Expenses that do not vary with the level of production output, including salaries of managers, lease payments, and maintenance.

Units Produced

The total number of units of product manufactured during a specific time frame.

Manufacturing Overhead Costs

These are indirect costs related to manufacturing that cannot be directly traced to specific units produced, such as utilities or maintenance expenses.

September

In the Gregorian calendar, it is the month that falls ninth in the sequence.