Which of the following statements is not true?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Which of the following statements is not true?
O A cash sale of used machinery and equipment at its net book value (no gain or loss) will neither increase nor
decrease the equity multiplier ratio.
O Taking out a bank loan and using the funds to purchase new machinery and equipment will increase the book
value per share.
O Taking out a bank loan and using the funds to buy back some outstanding shares of common stock will
increase the return on equity ratio.
O Issuing new shares of common stock in exchange for cash will decrease the debt-to-equity ratio.
O Using cash to pay off a bank loan will increase total asset turnover.
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