Indicate (by letter) whether the actions listed in the table will immediately increase (I), decrease (D), or have no effect (N) on the ratios shown in the table. Assume each ratio is less than 1.0 before the action is taken.

Most decisions made by management impact the ratios analyst use to evaluate performance. Indicate by letter whether each of the actions listed below will immediately increased I decrease D or have no effect N on the ratios shown. Assume each ratio is less than 1.0 before the action is taken.

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Actions Issuance of long term bond Issuance of short term noted Payment of accounts payable Purchase of inventory for cash Purchase of equipment with a 4 year note Retirement of bonds Sales of common stock Write off of obsolete inventory Purchase of short term investment for cash Decision to refinance on a long term basis some Current maturity debt current ration acid test ratio debt to equity ratio Actions Issuance of long term bond Issuance of short term noted Payment of accounts payable Purchase of inventory for cash Purchase of equipment with a 4 year note Retirement of bonds Sales of common stock Write off of obsolete inventory Purchase of short term investment for cash Decision to refinance on a long term basis some Current maturity debt current ration acid test ratio debt to equity ratio

Answer rating: 100% (QA)

Actions Current ratio Acid test ratio Debt to equity ratio Issuance of longterm bond I I I ... View the full answer