At the end of last year,Ace Company had total assets in the amount of $6,000,000 and total liabilities in the amount of $4,000,000.The company issued shares to new stockholders at the beginning of the current year for $1,000,000.As a direct result of this transaction,the:
A) debt-to-assets ratio will increase.
B) asset turnover ratio will decrease.
C) net profit margin ratio will increase.
D) net profit margin ratio will decrease.

Question

Quizplus · Accepted Answer

Issuing shares increases total assets without affecting sales, which can decrease the asset turnover ratio, as it is calculated by dividing sales by total assets.

At the End of Last Year,Ace Company Had Total Assets