A Company Issued Additional Shares of Stock

question 148

Multiple Choice

A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?

• A)Earnings per share decreased.
• B)The debt-to-equity ratio increased.
• C)The asset turnover ratio decreased.
• D)Return on equity remained unchanged.

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Definitions:

Bailees

Individuals or entities that have been given temporary possession but not ownership of a property under a bailment agreement.

Liability

A legal responsibility or obligation, often involving financial compensation for damage or harm caused.

Prudently

Acting with or showing care and thought for the future, typically in the management of resources or decision-making processes.

Repair Costs

Expenses incurred to fix or restore damaged or worn-out goods or property to their original condition.