Effect of transactions on various financial ratios. Include the effect that each transaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use + for increase, - for decrease, and (NE) for no effect. Assume that current assetsexceed current liabilities in all cases both before and after the transaction/event.

Transactions/event ...............Financial Ratio

Purchased inventory on account..........Number of days’ sales in inventory

Sold inventory for cash, at a profit.........Inventory turnover

Issued a 10% stock dividend...........Earnings per share

Issued common stock for cash............Debt ratio

Sold land at a gain................Return on investment

Purchased treasury stock for cash..........Debt/equity ratio

Accrued interest on a note payable...........Times interest earned

Accrued wages that have been earned by employees...Current ratio

Purchased equipment for cash ............Plant and equipment turnover

Issued bonds at an interest rate that is less than the company’s ROI..Return on equity