A company has acquired a major new piece of equipment immediately before the yearend.

The cost is £100,000, part of which is financed through the issue of £50,000 debentures and the rest by taking £50,000 out of current cash resources. What is the impact of acquisition on the company’s accounting ratios if all other accounting figures remain unchanged?

(a) A decrease in non-current (fixed) asset usage: increase in debt/equity ratio: no change in return on shareholders’ equity

(b) An increase in non-current (fixed) asset usage: increase in debt/equity ratio: increase in return on shareholders’ equity

(c) An increase in non-current (fixed) asset usage: increase in debt/equity ratio: decrease in return on shareholders’ equity

(d) An increase in non-current (fixed) asset usage: decrease in debt/equity ratio: no change in return on shareholders’ equity