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question 38

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Use the information below to answer the following questions:
Unstable Ltd has decided to change its depreciation method from straight-line to reducing balance, with the agreement of its auditors and taxation authorities. As a result, its annual depreciation expense increases by $200,000. The company’s income tax rate is 40%.
-What is the effect on the debt-to-equity ratio?


Definitions:

Price

The pecuniary sum needed, anticipated, or disbursed for purchasing something.

Demand Curve

A Demand Curve illustrates how the quantity demanded of a good or service varies with its price, typically showing an inverse relationship.

Quantity Demanded

The overall volume of a product or service that individuals are inclined and financially able to acquire at a determined price.

Decrease

A reduction in amount, size, strength, or frequency.

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