Fad Foods Ltd completed a series of transactions, which are listed below. Before the transactions, both the current and quick asset ratios were greater than 1. The cash account has a debit balance.

Indicate the effect of each of the transactions listed below on the ratio listed opposite it. For each transaction, state whether the ratio would increase, decrease or have no effect. Treat each transaction independently.

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Transaction Redeemed debentures by issuing ordinary shares Purchased inventory on credit 3 Sold inventory for cash with a 40 per cent mark-up on cost 4 Issued additional ordinary shares for cash 5 Collected an account receivable balance 6 7 1 23 Paid accounts payable Paid accounts payable Ratio Return on equity Quick ratio Current ratio Debt-to-equity ratio Debtors turnover Return on assets Profit margin