Santana Company issued additional shares of common stock.The effect of the transaction is
A) the earnings per share increased
B) the debt-to-equity ratio increased
C) the earnings per share decreased
D) the asset turnover ratio decreased

Question

Quizplus · Accepted Answer

When a company issues additional shares of common stock, the number of outstanding shares increases. As the earnings are divided by the number of outstanding shares, the earnings per share decreased, which negatively impacts the shareholders. The debt-to-equity ratio and the asset turnover ratio are not affected by the issuance of additional shares.

Santana Company Issued Additional Shares of Common Stock