The Current Balance Sheet of Greyson Inc

question 248

Multiple Choice

The current balance sheet of Greyson Inc. reports total assets of $40 million, total liabilities of $4 million, and stockholders' equity of $36 million. Greyson is considering several financing possibilities in order to expand operations. What will be the effect on Greyson's debt to assets ratio if Greyson issues an additional $8 million in stock to finance its expansion?

• A) The debt to assets ratio will decrease from .1(4/40) to .083 (4/48) after the additional stock sale.
• B) The debt to assets ratio will decrease from 4/36 before to 4/44 after the additional stock sale.
• C) The debt to assets ratio will increase from 40 before to 48 after the additional investment.
• D) The additional stock issuance will have no effect on the debt to assets ratio.

---

Definitions:

Lack of Belief

A state in which an individual does not hold certain convictions or convictions at all regarding a specific matter or in general.

Undue Influence

A situation where an individual is able to influence another person's decisions due to a special relationship, often leading to unfair outcomes.

Relationships Affected

Refers to how interpersonal, societal, or business connections are influenced by certain events or decisions.

Voidable Contract

A contract that appears valid and enforceable on the surface but may be declared void by one of the parties based on certain grounds, such as fraud or coercion.