Question from Ninja (Audit)
Why would there be an increase of stockholders equity at the time when option was exercised? Wouldn't it have increased whenever the option was granted? I think I forget everything about FAR
The following information pertains to Ali Corp. as of and for the year ended December 31, 20X1:
Liabilities $ 60,000
Stockholders' equity $500,000
Shares of common stock issued and outstanding 10,000
Net income $ 30,000
During 20X1, Ali's officers exercised stock options for 1,000 shares of stock at an option price of $8 per share. What was the effect of exercising the stock options?
A. Debt-to-equity ratio decreased to 12%.
B. Earnings per share increased by $0.33.
C. Asset turnover increased to 5.4%.
Incorrect D. No ratios were affected.