If Sybil Ltd Issues Shares with a £1 Nominal Value

question 4

Multiple Choice

If Sybil Ltd issues shares with a £1 nominal value, for £2 per share, then the gearing proportion and the acid test ratio will be affected as follows:

• A) Gearing will increase and the acid test ratio will reduce.
• B) Gearing will reduce and the acid test ratio will reduce.
• C) Gearing will reduce and the acid test ratio will increase.
• D) Gearing will increase and the acid test ratio will increase.

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Definitions:

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Identifiable Contributions

Specific inputs or efforts by individuals or groups that can be directly linked to a particular outcome or result.

Coordination Efforts

The act of organizing and harmonizing activities, tasks, or individuals effectively to achieve a common goal.

Free-Rider Effect

The situation in which some members of a group benefit from the efforts of others without contributing themselves, often leading to inefficiency and resentment.