Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio.
-Skipped dividends on cumulative preferred stock

Question

Quizplus · Accepted Answer

Skipping dividends on cumulative preferred stock does not change the debt/equity ratio because it does not affect the total amount of debt or the total amount of equity. It merely postpones the payment of dividends to preferred shareholders.

Select the Effect (A, B, or C) That Each Transaction