If Book Equity Increases by $2,000,the Firm Does Not Issue

question 31

Multiple Choice

If book equity increases by $2,000,the firm does not issue new equity,and its net income is $2,500,then:

• A) the firm paid a dividend of $500.
• B) the firm plowed $500 back into the company.
• C) $500 went into retained earnings.
• D) debt increased by $2,000.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the costs of goods sold, indicating the profitability of a company.

Sales Decrease

A reduction in the amount of goods or services sold by a business within a specific time period.

Equity Financing

The method of raising capital through the sale of shares, offering investors ownership interests in the company.

Profit Margin

A financial metric that measures the percentage of profit a company retains after deducting its expenses from its total revenue.