The Lory Bookstore Used Internal Financing as a Source of Long-Term

question 6

Multiple Choice

The Lory Bookstore used internal financing as a source of long-term financing for 80% of its total needs in 2011. The company borrowed an additional 27% of its total needs in the long-term debt markets in 2011. What were Lory's net new stock issues in that year?

• A) -20%
• B) -7%
• C) 7%
• D) 20%
• E) 27%

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Definitions:

Return On Assets

A financial ratio indicating the profitability of a firm relative to its total assets, demonstrating how efficient a company is at using its assets to generate earnings.

Return On Equity

A financial performance metric determined by dividing net income by shareholders' equity, showcasing the efficiency of management in utilizing the company's assets to generate profits.

Times Interest Earned Ratio

A financial metric indicating how well a company can meet its interest obligations based on current earnings before interest and taxes.

Debt-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by shareholder equity.