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    Question

    In case the company has issued Bonus shares, which among

    the following ratios will be affected?
    A Debt to Equity Correct Answer Incorrect Answer
    B Liquidity Ratios Correct Answer Incorrect Answer
    C Activity Ratios Correct Answer Incorrect Answer
    D A and C Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

      In case of Bonus Issue, the overall capital remains the same, because a part of net worth (profits) is decreased and are being transferred to other part of the net worth (pure capital). Therefore, even the Debt Equity ratio will be unaffected.

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