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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 + 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 Number of days' sales in inventory Inventory turnover Earnings per share Debt ratio a. Purchased inventory on account. b. Sold inventory for cash, at a profit. C. Issued a 10% stock dividend. d. Issued common stock for cash. e. Sold land at a gain. f. Purchased treasury stock for cash. g. Accrued interest on a note payable. h. Accrued wages that have been earned by employees. i. Purchased equipment for cash. J. Issued bonds at an interest rate that is less than the company's ROI. Return on investment Debt/equity ratio Times interest earned Current ratio Plant and equipment turnover Return on equity

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 + 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 Number of days' sales in inventory Inventory turnover Earnings per share Debt ratio a. Purchased inventory on account. b. Sold inventory for cash, at a profit. C. Issued a 10% stock dividend. d. Issued common stock for cash. e. Sold land at a gain. f. Purchased treasury stock for cash. g. Accrued interest on a note payable. h. Accrued wages that have been earned by employees. i. Purchased equipment for cash. J. Issued bonds at an interest rate that is less than the company's ROI. Return on investment Debt/equity ratio Times interest earned Current ratio Plant and equipment turnover Return on equity

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 + 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. Purchased inventory on account. b. Sold inventory for cash, at a profit. C. Issued a 10% stock dividend. Number of days' sales in inventory Inventory turnover Earnings per share Debt ratio d. Issued common stock for cash. Return on investment e. Sold land at a gain. f. Purchased treasury stock for cash. g. Accrued interest on a note payable. h. Accrued wages that have been earned by employees. i. Purchased equipment for cash. J. Issued bonds at an interest rate that is less than the company's ROI. Debt/equity ratio Times interest earned Current ratio Plant and equipment turnover Return on equity
Transcribed Image Text: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 + 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. Purchased inventory on account. b. Sold inventory for cash, at a profit. C. Issued a 10% stock dividend. Number of days' sales in inventory Inventory turnover Earnings per share Debt ratio d. Issued common stock for cash. Return on investment e. Sold land at a gain. f. Purchased treasury stock for cash. g. Accrued interest on a note payable. h. Accrued wages that have been earned by employees. i. Purchased equipment for cash. J. Issued bonds at an interest rate that is less than the company's ROI. Debt/equity ratio Times interest earned Current ratio Plant and equipment turnover Return on equity
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