Which of the following is an effect of issue of shares for cash?
A) The return on sales increases.
B) The quick ratio increases.
C) The debt-to-equity ratio increases.
D) The receivables turnover ratio increases.

Question

Quizplus · Accepted Answer

When a company issues shares for cash, it increases its cash balance, which in turn increases the numerator of the quick ratio. As a result, the quick ratio increases, reflecting the company's ability to meet short-term liabilities. The return on sales, debt-to-equity ratio, and receivables turnover ratio are not directly affected by the issue of shares for cash.

Which of the Following Is an Effect of Issue of Shares