Question
A company pays a dividend on common stock, thereby reducing its cash balances. What effect does payment of the dividend have on its leverage ratio
A company pays a dividend on common stock, thereby reducing its cash balances. What effect does payment of the dividend have on its leverage ratio and net profit margin?
| a. | No effect on debt/equity; decreases net profit/sales | |
| b. | Decreases debt /equity; decreases net profit/sales | |
| c. | Increases debt/equity; no effect on net profit/sales | |
| d. | Decreases debt/equity; increases net profit/sales |
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Intermediate Accounting
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
10th Canadian Edition, Volume 1
978-0176509736
