Complete the following table by indicating whether the listed transactions would improve, worsen, or have no effect
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Complete the following table by indicating whether the listed transactions would improve, worsen, or have no effect on the financial ratios listed below. Consider each transaction independently. The answer for the first transaction is presented as an example.
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Ratio Ratio definition Ratio without transaction Repayment of a bond on the first day of the fiscal year Conversion of a bond with a 10% stated rate into common shares Sale of 2,000 common shares for cash Sale of $5,000 of inventory on credit for $6,000 revenue Return on common shareholders' equity (Net income - Preferred dividends) / Common equity 16% No effect Current ratio Current assets/ Current liabilities 1.25 Worsen Operating margin Operating profit/ Revenue 10% No effect
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