Aleve Company Purchased Inventory on Credit

question 129

Multiple Choice

Aleve Company purchased inventory on credit.The effect of this transaction is that the

• A)earnings per share decreased.
• B)working capital increased.
• C)debt-to-equity ratio increased.
• D)earnings per share increased.

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Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the financial gain that exceeds opportunity costs.

Perfect Competitor

A firm in a perfectly competitive market, having no control over market price and where goods offered are perfect substitutes.

Differentiated Product

A product that has been designed or marketed to stand out from similar products offered by competitors.

Elastic

Refers to the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.