Question: Daley Inc is consistently profitable Its normal financial statement relationships

Daley, Inc., is consistently profitable. Its normal financial statement relationships are as follows:
Current ratio .......... 3 to 1
Inventory turnover ....... 4 times
Long-term debt/total assets ratio .. 0.5 to 1

Determine whether each transaction or event that follows increased, decreased, or had no effect on each ratio. Consider each transaction independently of the others.
1. Daley declared but did not pay a cash dividend.
2. Customers returned invoiced goods for which they had not paid.
3. Accounts payable were paid at year-end.
4. Daley recorded both a receivable from an insurance company and a loss from fire damage to a factory building.
5. Early in the year, Daley increased the selling price of one of its products because customer demand far exceeded production capacity. The number of units sold this year was the same as last year.

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  • CreatedSeptember 10, 2014
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