Stock Dividends and Stock Splits Are Similar in All of the Following

question 155

Multiple Choice

Stock dividends and stock splits are similar in all of the following ways except:

• A)they both involve a pro rata distribution of shares to existing stockholders.
• B)they both reduce the stock price.
• C)they both decrease Retained Earnings.
• D)they both have no effect on cash.

---

Definitions:

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue; calculated by dividing sales revenue by total assets.

Equity Multiplier

The equity multiplier is a financial ratio that measures a company's leverage by dividing its total assets by its total shareholders' equity, indicating how much of the assets are financed by equity.

Market-To-Book Ratio

A financial valuation metric comparing a company's stock market value to its book value.

Price-Earnings Ratio

A valuation metric that compares a company's share price to its per-share earnings, used to evaluate if a stock is over or under-valued.