Question

Listed in the right-hand column below are certain financial ratios. To the left of each ratio is a business transaction or event relating to the operating activities of Candice, Inc., an exporter of ceramic tile?
Business Transaction or Event Ratio_________________
1. The company declared a cash dividend. Current ratio
2. The company sold inventory on account. Acid-test ratio (quick ratio)
3. The company’s net income decreased by Times interest earned
5 percent between last year and this year.
Long-term debt remained unchanged.
4. A previously declared cash dividend was paid. Current ratio
5. Obsolete inventory totaling $60,000 was Inventory turnover ratio
written off at a loss.
6. The company sold inventory for cash at a profit. Debt-to-equity ratio
7. The company issued common stock for cash. Earnings per share
8. The company paid $7,000 on accounts payable. Current ratio
9. The company purchased inventory on credit terms. Acid test (quick ratio)
10. The market price of the company’s common Price–earnings ratio
stock increased from $24.50 to $37.20.Earnings
per share remained unchanged.

Required
Indicate the impact of the transaction on the corresponding ratio (increase, decrease, or no effect).



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  • CreatedSeptember 23, 2013
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