Question : The Debt-Equity Ratio of a Company is 1: 2. Payment of Dividend Payable would
Option 1: Increase debt to equity ratio
Option 2: Decrease debt to equity ratio
Option 3: No change
Option 4: Increase current ratio
Correct Answer: No change
Solution : Answer = No change
Payment of dividend payable will neither increase nor decrease long-term debt and balance of shareholder fund. Payment of dividend payable does not affect long-term debt or shareholder funds, so there is no change in the debt-equity ratio. Dividend payments involve only the distribution of profits and do not impact the capital structure. Hence, the correct option is 3.
Question : The Debt-Equity Ratio of a Company is 1: 2. Goods purchased on Credit would
Question : Assuming that the Current Ratio is 2: 1, the Sale of a fixed asset on a credit of 2 months would _____.
Option 1: Increase current ratio
Option 2: Decrease current ratio
Option 3: Neither increase nor decrease
Option 4: Increase debt equity ratio
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile