A company starts with $1 billion in assets, $400 million in owners’ equity & $600 million in debt. It borrows $100 million from its bank to keep as cash. What does this do to its balance sheet? Increases assets and increases leverage ratio Increases assets and decreases leverage ratio Unchanged assets and increases leverage ratio Unchanged assets and unchanged leverage ratio Decrease assets and decrease leverage ratio
A company starts with $1 billion in assets, $400 million in owners’ equity & $600 million in debt. It borrows $100 million from its bank to keep as cash. What does this do to its balance sheet? Increases assets and increases leverage ratio Increases assets and decreases leverage ratio Unchanged assets and increases leverage ratio Unchanged assets and unchanged leverage ratio Decrease assets and decrease leverage ratio
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A company starts with $1 billion in assets, $400 million in owners’ equity & $600 million in debt. It borrows $100 million from its bank to keep as cash. What does this do to its balance sheet?
|
Increases assets and increases leverage ratio |
|
Increases assets and decreases leverage ratio |
|
Unchanged assets and increases leverage ratio |
|
Unchanged assets and unchanged leverage ratio |
|
Decrease assets and decrease leverage ratio |
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