The following information pertains to Ali Corp. as of and for the year ended December 31, 2006:
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|
Liabilities |
$ 60,000 |
|
Stockholders’ equity |
$ 500,000 |
|
Shares of common stock issued and outstanding |
10,000 |
|
Net income |
$ 30,000 |
During 2006, 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?
- Debt to equity ratio decreased to 12%.
- Earnings per share increased by $0.33.
- Asset turnover increased to 5.4%.
- No ratios were affected.