Accounting: What the Numbers Mean
11th Edition
ISBN: 9781259535314
Author: David Marshall, Wayne William McManus, Daniel Viele
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 11, Problem 11.7E
Exercise 11.7
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.
| Trans action/Event | Financial Ratio |
| a. Split the common stock 2 for l. | Book value per share of common stock |
| b. Collected |
Number of days’ sales in accounts receivable |
| c. Issued common stock for cash. | Total asset turnover |
| d. Sold |
Return on equity |
| e. Accrued interest on a note receivable. | |
| f. Sold inventory- on account. | Acid-test ratio |
| g. Wrote off an uncollectible account. | Accounts receivable turnover |
| h. Declared a cash dividend. | Dividend yield |
| i. Incurred operating expenses. | Margin |
| j. Sold equipment at a loss. | Earnings per share |
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Chapter 11 Solutions
Accounting: What the Numbers Mean
Ch. 11 - Prob. 11.1MECh. 11 - Calculate activity measures The following...Ch. 11 - Prob. 11.3MECh. 11 - Prob. 11.4MECh. 11 - Prob. 11.5ECh. 11 - Exercise 11.6 Obtain an annual report and discuss...Ch. 11 - Exercise 11.7 Effect of transactions on various...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9PCh. 11 - Problem 11.10 LQ 9 Prepare a common size balance...
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