Answer: Stock dividends

## Explanation Stock dividends do not affect a company's leverage ratios because: - **Stock dividends** involve issuing additional shares to existing shareholders without any cash outflow - They represent a transfer from retained earnings to paid-in capital within shareholders' equity - Since there is no change in total assets or liabilities, leverage ratios (such as debt-to-equity, debt-to-assets) remain unchanged In contrast: - **Extra dividends** and **regular cash dividends** involve cash payments to shareholders - These reduce retained earnings and total equity, which can increase leverage ratios - The reduction in equity makes the company appear more leveraged Therefore, stock dividends are the only option that does not impact leverage ratios.

Author: LeetQuiz Editorial Team