Purchasing inventory on credit increases the book value per share of a retailer.

Question

Quizplus · Accepted Answer

Purchasing inventory on credit does not increase the book value per share of a retailer. The book value per share is calculated by subtracting liabilities (such as accounts payable) from assets and dividing by the number of shares outstanding. When inventory is purchased on credit, it increases the retailer's liabilities and therefore does not increase the book value per share.

Purchasing Inventory on Credit Increases the Book Value Per Share