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4. How would each transaction affect the ROE ratio? (Use + for increase, - for decrease, and NE for no effect.)

4. How would each transaction affect the ROE ratio? (Use + for increase, - for decrease, and NE for no effect.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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4. How would each transaction affect the ROE ratio? (Use + for increase, - for decrease, and NE for no effect.) a. Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no- par preferred shares and 200,000 $2 par common shares. Outstanding shares include 43,000 preferred shares and 33,000 common shares. Recently the following transactions have taken place. Transaction b. C. a. NGS issues 650 preferred shares for $13 a share. b. NGS repurchases 650 common shares for $12 a share. c. On November 12, the board of directors declares a $0.30 cash dividend on each outstanding preferred share. d. The dividend is paid December 20. d. ROE
Transcribed Image Text:4. How would each transaction affect the ROE ratio? (Use + for increase, - for decrease, and NE for no effect.) a. Nicole has been financing Nicole's Getaway Spa (NGS) using equity financing. Currently NGS has authorized 100,000 no- par preferred shares and 200,000 $2 par common shares. Outstanding shares include 43,000 preferred shares and 33,000 common shares. Recently the following transactions have taken place. Transaction b. C. a. NGS issues 650 preferred shares for $13 a share. b. NGS repurchases 650 common shares for $12 a share. c. On November 12, the board of directors declares a $0.30 cash dividend on each outstanding preferred share. d. The dividend is paid December 20. d. ROE
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