Effect of transactions on various financial ratios Indicate the effect that eachtransaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use 1 for increase, − for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, bothbefore and after the transaction/event.Transaction/Event Financial Ratioa. Split the common stock 2 for 1.b. Collected accounts receivable.c. Issued common stock for cash.d. Sold treasury stock.e. Accrued interest on a note receivable.f. Sold inventory on account.g. Wrote off an uncollectible account.h. Declared a cash dividend.i. Incurred operating expenses.j. Sold equipment at a loss.Book value per share of common stockNumber of days’ sales in accounts receivableTotal asset turnoverReturn on equityCurrent ratioAcid-test ratioAccounts receivable turnoverDividend yieldMarginEarnings per share
Effect of transactions on various financial ratios Indicate the effect that each
transaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use 1 for increase, − for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, both
before and after the transaction/event.
Transaction/Event Financial Ratio
a. Split the common stock 2 for 1.
b. Collected accounts receivable.
c. Issued common stock for cash.
d. Sold treasury stock.
e. Accrued interest on a note receivable.
f. Sold inventory on account.
g. Wrote off an uncollectible account.
h. Declared a cash dividend.
i. Incurred operating expenses.
j. Sold equipment at a loss.
Book value per share of common stock
Number of days’ sales in accounts receivable
Total asset turnover
Return on equity
Current ratio
Acid-test ratio
Accounts receivable turnover
Dividend yield
Margin
Earnings per share
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