1 2 3 Transaction Redeemed debentures by issuing ordinary shares Purchased inventory on credit Sold inventory for cash with a 40 per cent mark-up on cost Ratio Return on equity Quick ratio Current ratio
1 2 3 Transaction Redeemed debentures by issuing ordinary shares Purchased inventory on credit Sold inventory for cash with a 40 per cent mark-up on cost Ratio Return on equity Quick ratio Current ratio
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity
Section: Chapter Questions
Problem 16P: Ratios Analyses: McCormick Refer to the information for McCormick above. Additional information for...
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Fad Foods Ltd completed a series of transactions, which are listed below. Before the transactions, both the current and quick asset ratios were greater than 1. The cash account has a debit balance. Indicate the effect of each of the transactions listed below on the ratio listed opposite it. For each transaction, state whether the ratio would increase, decrease or have no effect. Treat each transaction independently.
![Transaction
1 Redeemed debentures by issuing ordinary shares
2 Purchased inventory on credit
3
4
5
6
7
Sold inventory for cash with a 40 per cent mark-up on cost
Issued additional ordinary shares for cash
Collected an account receivable balance
Paid accounts payable
Paid accounts payable
Ratio
Return on equity
Quick ratio
Current ratio
Debt-to-equity ratio
Debtors turnover
Return on assets
Profit margin](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8284ae0-afe1-4daf-9028-49f3617e0cc3%2F9728d743-70fb-4704-a4f3-05dccac2a482%2Fkrsuus_processed.png&w=3840&q=75)
Transcribed Image Text:Transaction
1 Redeemed debentures by issuing ordinary shares
2 Purchased inventory on credit
3
4
5
6
7
Sold inventory for cash with a 40 per cent mark-up on cost
Issued additional ordinary shares for cash
Collected an account receivable balance
Paid accounts payable
Paid accounts payable
Ratio
Return on equity
Quick ratio
Current ratio
Debt-to-equity ratio
Debtors turnover
Return on assets
Profit margin
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![Transaction
1 Redeemed debentures by issuing ordinary shares
2 Purchased inventory on credit
3
4
5
6
7
Sold inventory for cash with a 40 per cent mark-up on cost
Issued additional ordinary shares for cash
Collected an account receivable balance
Paid accounts payable
Paid accounts payable
Ratio
Return on equity
Quick ratio
Current ratio
Debt-to-equity ratio
Debtors turnover
Return on assets
Profit margin](https://content.bartleby.com/qna-images/question/b8284ae0-afe1-4daf-9028-49f3617e0cc3/54dc218f-3999-4d01-8c22-7c7ff2bd5e98/uutnoo8_thumbnail.png)
Transcribed Image Text:Transaction
1 Redeemed debentures by issuing ordinary shares
2 Purchased inventory on credit
3
4
5
6
7
Sold inventory for cash with a 40 per cent mark-up on cost
Issued additional ordinary shares for cash
Collected an account receivable balance
Paid accounts payable
Paid accounts payable
Ratio
Return on equity
Quick ratio
Current ratio
Debt-to-equity ratio
Debtors turnover
Return on assets
Profit margin
Solution
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