A company issued additional shares of stock. Which of the following is true with regard to the effect of the stock issuance transaction on the company's ratio computations?
A)Earnings per share decreased.
B)The debt-to-equity ratio increased.
C)The asset turnover ratio decreased.
D)Return on equity remained unchanged.

Question

Quizplus · Accepted Answer

Issuing additional shares of stock would increase the number of outstanding shares, which in turn would decrease earnings per share (EPS). The other ratios mentioned would not be directly affected by a stock issuance.

A Company Issued Additional Shares of Stock