They already come with answers, but you need to come up with your additional/complementary explanations on why the answer is correct.

1. Earnings that are retained and not distributed as dividends __________ a firms equity. 2. Retaining earnings and using the proceeds to retire debt __________ the firms total assets. 3. The price of a stock __________ when the stock trades on the ex-div date. 4. A stock dividend __________ the number of shares outstanding and __________ the price of the stock. 5. A 2-for-1 stock split __________ the firms assets, the firms liabilities, and __________ the firms equity. 6. A 1-for-10 stock split __________ the price of the stock. 7. An increase in earnings __________ the payout ratio. 8. A 4-for-3 stock split __________ earnings per share. 9. A stock repurchase __________ a firms liabilities. 10. If a firm repurchases stock, its equity __________. 11. If a firm issues a long-term bond and uses the proceeds to reduce short-term loans from a bank, the current ratio and quick ratio __________. 12. If a firm collects an account receivable, the current ratio __________. 13. A decrease in inventory __________ inventory turnover and __________ fixed asset turnover. 14. Operating at a loss __________ the debt ratio. 15. An increase in income taxes __________ times-interest-earned. 16. An increase in days sale outstanding __________ the firms liquidity position. 17. An increase in interest expense __________ the operating profit margin and __________ the net profit margin. 18. An increase in depreciation expense __________ earnings and __________ cash flow 19. A(n) __________ in an asset is a cash inflow. 20. A(n) __________ in liabilities is a cash inflow and a(n) __________ in equity is a cash outflow.

1. increase 2. does not affect (no change) 3. decreases 4. increases, decreases 5. does not affect the assets, liabilities, and equity 6. increases 7. decreases 8. decreases 9. does not affect (no change) 10. decreases 11. increase

12. is not affected (no change) 13. increases, does not affect (no change) 14. increases (reduces retained earnings) 15. does not affect (no change) 16. decreases 17. does not affect (no change), decreases 18. decreases, increases 19. decrease 20. increase, decrease