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

Question

Quizplus · Accepted Answer

When a company issues additional shares of common stock, the number of shares outstanding increases while the earnings remain the same. This results in a dilution of earnings and a decrease in earnings per share (EPS). Therefore, option C is the correct choice. Option A is incorrect because EPS decreases, not increases. Option B and D are unrelated to the issuance of common stock.

Santana Company Issued Additional Shares of Common Stock