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A security analyst obtained the following information from Prestopino Products' financial statements: Retained earnings on its balance sheet at the end of 2011 were $700,000,
A security analyst obtained the following information from Prestopino Products' financial statements:
Retained earnings on its balance sheet at the end of 2011 were $700,000, but retained earnings at the end of 2012 had declined to $320,000. | |
The company did not buy any shares back. | |
The company's depreciation expense is its only non-cash expense; it has no amortization charges. | |
The company has no non-cash revenues. | |
The company's net income for 2012 was exactly zero dollars. | |
On the basis of this information, what could have caused the reduction in retained earnings?
Prestopino had losses in the years before 2011. | ||
Prestopino's paid dividends despite zero net income. | ||
Prestopino reduced its net fixed assets in 2012 compared to 2011. | ||
Prestopino's borrowed more money in 2012. | ||
Prestopino's converted some of its retained earnings into cash. |
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