Toad plc is considering paying an ordinary dividend of 500,000. At present, the company has 2.4 million in the bank. What effect will the dividend payment have on the following ratios?

Group of answer choices

The gross profit margin will decrease and the acid test ratio will decrease.

The gross profit margin will decrease and there will be no effect on the acid test ratio.

There will be no effect on the gross profit margin and the acid test ratio will decrease.

There will be no effect on the gross profit margin and no effect on the acid test ratio.

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