Davis Corporation, a clothing retailer, engaged in the transactions that follow. Opposite each transaction is a ratio and space to mark the effect of each transaction on the ratio.

Required
Show that you understand the effect of business activities on performance measures by placing an X in the appropriate column to show whether the transaction increased, decreased, or had no effect on the indicatedratio.

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Effect Transaction a. Issued common stock for cash b. Declared cash dividend. C. Sold treasury stock. d. Borrowed cash by issuing note payable. Debt to equity ratico e. Paid salaries expense f. Purchased merchandise for cash. g. Sold equipment for cash. h. Sold merchandise on account. i. Paid current portion of long-term debt. Return on assets . Gave sales discount, k. Purchased marketable securities for cash. Quick ratio Ratio Asset turnover Current ratio Return on equity Increase Decrease None Inventory turnover Current ratio Receivables turnover Quick ratio Profit margin Declared 5% stock dividend. m. Purchased a building. Current ratio Free cash flow