Aleve Company Purchased Inventory on Credit

question 129

Multiple Choice

Aleve Company purchased inventory on credit.The effect of this transaction is that the

• A)earnings per share decreased.
• B)working capital increased.
• C)debt-to-equity ratio increased.
• D)earnings per share increased.

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Definitions:

Financial Capital

Economic resources or funds available to businesses for use in the production of further wealth, through investment or other means.

Stockholders' Equity

The residual interest in the assets of an entity that remains after deducting its liabilities, representing the ownership interest in a company.

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders, used for reinvestment or debt payment.