Which one of the following will increase the value of shareholders' equity?
A) The repurchase of outstanding shares of stock by the issuer
B) Positive net income and a dividend payout ratio of 60 percent
C) The repayment of short-term debt
D) The conversion of short-term debt to long-term debt
E) The sale of fixed assets at their book value

Question

Quizplus · Accepted Answer

Positive net income increases shareholders' equity as it adds to retained earnings. A dividend payout ratio of 60 percent means only 60% of the earnings are distributed as dividends, while the remaining 40% is retained in the business, further increasing shareholders' equity.

Which One of the Following Will Increase the Value of Shareholders