Which of the following statements is correct?
A)Repayment of a bond on the first day of the fiscal year will decrease the shareholders' return on equity.
B)Conversion of a 10% bond with no short term maturity, into common shares on the first day of the year will have no effect the current ratio.
C)The sale of 2,000 common shares for cash will improve the shareholders' return on equity.
D)The sale of $5,000 of inventory on credit for $6,000 will have no effect on the operating margin.

Question

Quizplus · Accepted Answer

Converting a bond into common shares does not affect current assets or current liabilities, thus it does not impact the current ratio.

Which of the Following Statements Is Correct