Which one of the following will increase the value of shareholders' equity?
A) The repurchase of outstanding shares of stock by the issuer
B) Positive net income and a dividend payout ratio of 60 percent
C) The repayment of short-term debt
D) The conversion of short-term debt to long-term debt
E) The sale of ﬁxed assets at their book value

Question

Quizplus · Accepted Answer

Positive net income increases retained earnings, which is a component of shareholders' equity. A dividend payout ratio of 60 percent indicates that a portion of the net income is being returned to shareholders, but the remaining amount will still increase shareholders' equity. The other options may have an impact on the financial statements, but they do not increase shareholders' equity directly.

Which One of the Following Will Increase the Value of Shareholders