Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (1), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken. 1. Issuance of long-term bonds 2. Issuance of short-term notes 3. Payment of accounts payable. 4. Purchase of inventory on account Action 5. Purchase of inventory for cash 6. Purchase of equipment with a 4-year note 7. Repayment of long-term notes payable 8. Issuance of common stock 9. Payment for advertising expense 10. Purchase of short-term investment for cash 11. Reclassification of long-term notes payable to current notes payable Current Ratio Acid-Test Ratio Debt to Equity Ratio

Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (1), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken. 1. Issuance of long-term bonds 2. Issuance of short-term notes 3. Payment of accounts payable. 4. Purchase of inventory on account Action 5. Purchase of inventory for cash 6. Purchase of equipment with a 4-year note 7. Repayment of long-term notes payable 8. Issuance of common stock 9. Payment for advertising expense 10. Purchase of short-term investment for cash 11. Reclassification of long-term notes payable to current notes payable Current Ratio Acid-Test Ratio Debt to Equity Ratio

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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