Answer:
Its earnings per share will decrease.
Its return on equity will go down.
Its equity multiplier will go down.
Explanation:
Since net income remains the same, earnings per share will decrease. This happens because there will be more stocks outstanding (the denominator in the EPS formula), so the result will be lower.
Return on equity will also decrease, since net income will remain the same while equity increases (same logic as EPS).
Unless this company is 100% financed through equity, it will have some debt (liabilities). The equity multiplier = total assets / total equity. E.g. total assets increase from $20 to $22 million, and total equity increases from $30 to $32 million.
Original equity multiplier = $40 / $30 = 1.333
Equity multiplier after issuing more stocks = $42 / $32 = 1.3125
C. Its equity multiplier will go down.
D. Its current ratio will go down.
E. Its quick ratio will go down.
I think the correct answer is A
Total; percentage
Answer:
option (b) $55,000
Explanation:
Data provided in the question:
Cash distributed = $15,000
Fair market value of the land = $50,000
Inside basis at the time of the distribution = $52,000
Gupta's outside basis = $70,000
Now,
Gupta's Outside basis = Cash + Basis in land
or
$70,000 = $15,000 + Basis in land
or
Basis in land = $70,000 - $15,000
or
Basis in land = $55,000
Hence,
The answer is option (b) $55,000
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Answer: D
Explanation: it is advisable to use government benefits as an important source of income prior to retirement. Since income will no longer flow like before during the retirement period, government benefit and other allowance remain as the source of income for especially in a situation where there is no other private source of income.
