Which of the following is the effect of issue of additional common stock by a company on its liquidity and profitability metrics?
A) Its profitability increases.
B) Its profitability and liquidity increase.
C) Its profitability and liquidity remain unaffected.
D) Its liquidity increases.

Question

​Which of the following is the effect of issue of additional common stock by a company on its liquidity and profitability metrics?
A) ​Its profitability increases.
B) ​Its profitability and liquidity increase.
C) ​Its profitability and liquidity remain unaffected.
D) ​Its liquidity increases.

Quizplus · Accepted Answer

Issue of additional common stock leads to an increase in the company's liquidity metrics, as the company receives cash in exchange for the stocks. The profitability metrics, however, are not directly affected by the issue of common stock.

​Which of the Following Is the Effect of Issue of Additional

Which of the Following Is the Effect of Issue of Additional