For each of the following transactions, indicate whether it increases, decreases, or has no effect on the following financial ratios: current ratio, debt-to-equity ratio, profit margin ratio, and return on equity. Assume the current ratio and debt-to-equity ratio are greater than one and the profit margin ratio and return on equity are less than one before each of the entries is considered. Consider each transaction independently.
a. Purchase land for $25,000 cash.
b. Borrow $10,000 from the bank for five years.
c. Sale of services for cash.
d. An expense incurred; payment to be made in a month
e. Sale of common shares for cash.

  • CreatedFebruary 26, 2015
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