A) the sale of additional shares of common stock by the company.
B) an increase in the dividends paid to common stockholders by the company.
C) an increase in the company's net income.
D) the issuance of bonds by the company to finance construction of new buildings.
10. The market price of XYZ Company's common stock dropped from $25 to $21 per share. The dividend paid per share remained unchanged. The company's dividend payout ratio would:
C) be unchanged.
D) impossible to determine without more information.
11. An increase in the market price of a company's common stock will immediately affect its:
A) dividend yield ratio.
B) debt-to-equity ratio.
C) earnings per share of common stock.
D) dividend payout ratio.
12. Financial leverage is negative when:
A) the return on total assets is less than the rate of return on common stockholders' equity.
B) total liabilities are less than stockholders' equity.
C) total liabilities are less than total assets.
D) the return on total assets is less than the rate of return demanded by creditors.
13. If a company converts a short-term note payable into a long-term note payable, this transaction would:
A) decrease working capital and increase the current ratio.
B) decrease working capital and decrease the current ratio.
C) decrease the current ratio and decrease the acid-test ratio.
D) increase working capital and increase the current ratio.
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