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A company's balance sheet has changed due to an increase in common stock issued. Which of the following would be effects to the company's finances?
A company's balance sheet has changed due to an increase in common stock issued. Which of the following would be effects to the company's finances?
I. Earnings per share will be diluted and ROE would decline.
II. WACC would probably increase and it would be harder to satisfy shareholder expected returns.
III. Debt/Equity ratio would increase as leverage declines.
IV. Book value of the company would increase.
a.All are effects.
b.Only I, II, and III are effects
c.Only I, II and IV are effects.
d.None are effects.
e.Only II, III, and IV are effects
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