Two lists follow: one for ratios and another for transactions.
Ratios:
a. Current ratio
b. Quick ratio
c. Accounts receivable turnover
d. Inventory turnover
e. Debt to total assets
f. ROA
g. ROE
Transactions:
1. Goods costing $200,000 are sold to customers on credit for $380,000.
2. Accounts receivable of $140,000 are collected.
3. Inventory costing $110,000 is purchased from suppliers.
4. A long-term bank loan for $500,000 is arranged with the bank, and the company receives the cash at the beginning of the year.
5. The bank loan carries an interest rate of 18% and the interest payment is made at the end of the year.
6. The company uses $40,000 to buy short-term investments.
7. New common shares are issued for $250,000.
Required:
State the immediate effect (increase, decrease, or no effect) of each transaction on each ratio. You may want to format your answer in a table with the ratios down the left, and the transactions across the top.