In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transaction should be considered independently).

Required:

Indicate the effect that each business transaction or event would have on the ratio listed opposite to it. State the effect in terms of increase, decrease, nr no effect on the ratio involved, and give the reason for your answer In all cases, assume that the current assets exceed the current liabilities both before and after the event or transaction. Use the following format for your answers:

Business Transaction or Event Ratio Declared a cash dividend. Current ratio 2. Sold inventory on account at cost. Acid-test ratio Issued bonds with an interest rate of 8%. The company's 3. Retum on common stockholders' equity return on assets is 10%. Net income decreased by 10% between last year and this Times interest eamed year. Long-term debt remained unchanged. 5. Paid a previously declared cash dividend. The market price of the company's common stock Dividend payout ratio dropped from $24.50 to $20.00. The dividend paid per share remained unchanged. Obsolete inventory totaling $100,000 was written off as a Inventory loss. 4. Current ratio 6. 7. tumover ratio Sold inventory for cash at a profit. 9. Changed customer credit terms from 2/10, n/30 to 2/15, Debt-to-equity ratio n/30 to comply with a change in industry practice. 10. ssued a stock dividend to common stockholders. 11. The market price of the company's common stock Book value per share 8. Accounts receivable tumover ratio Book value per share increased from $24.50 to $30.00. 12. Paid $40,000 on accounts payable. 13. Issued a stock dividend to common stockholders. 14. Paid accounts payable. 15. Purchased inventory on account. 16. Wrote off an uncollectible account against the Allowance Acid-test ratio for Bad Debts. Working capital Eamings per share Debt-to-equity ratio Current ratio 17. The market price of the company's common stock increased from $24.50 to $30.00. Eamings per share Price-eamings ratio remained unchanged. The market price of the company's common stock 18. increased from $24.50 to $30.00. The dividend paid per Dividend yield ratio share remained unchanged