Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it. Use + for increase, - for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, both before and after the transaction/event. Transaction/Event Financial Ratio Effect a. Split the common stock 2 for 1. b. Collected accounts receivable. c. Issued common stock for cash. d. Sold treasury stock. e. Accrued interest on a note receivable. f. Sold inventory on account. g. Wrote off an uncollectible account. h. Declared a cash dividend. i. Incurred operating expenses. j. Sold equipment at a loss. Book value per share of common stock Number of days' sales in accounts receivable Total asset turnover Return on equity Current ratio Acid-test ratio Accounts receivable turnover Dividend yield Margin NE Earnings per share

Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it. Use + for increase, - for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, both before and after the transaction/event. Transaction/Event Financial Ratio Effect a. Split the common stock 2 for 1. b. Collected accounts receivable. c. Issued common stock for cash. d. Sold treasury stock. e. Accrued interest on a note receivable. f. Sold inventory on account. g. Wrote off an uncollectible account. h. Declared a cash dividend. i. Incurred operating expenses. j. Sold equipment at a loss. Book value per share of common stock Number of days' sales in accounts receivable Total asset turnover Return on equity Current ratio Acid-test ratio Accounts receivable turnover Dividend yield Margin NE Earnings per share

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter13: Financial Statement Analysis

Section: Chapter Questions

Problem 13.2P

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Effect of transactions on various financial ratios Indicate the effect that eachtransaction/event listed here will have on the financial ratio listed opposite it, and provide an explanation for your answer. Use 1 for increase, − for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, bothbefore and after the transaction/event.Transaction/Event Financial Ratioa. Split the common stock 2 for 1.b. Collected accounts receivable.c. Issued common stock for cash.d. Sold treasury stock.e. Accrued interest on a note receivable.f. Sold inventory on account.g. Wrote off an uncollectible account.h. Declared a cash dividend.i. Incurred operating expenses.j. Sold equipment at a loss.Book value per share of common stockNumber of days’ sales in accounts receivableTotal asset turnoverReturn on equityCurrent ratioAcid-test ratioAccounts receivable turnoverDividend yieldMarginEarnings per share
Question: 7. Quick assets ratio or Quick ratio or Acid test ratio (need interpretation) Current assets – stock at end of period/current liabilities at end of period
1 3. Which of the following should be presented in the statement of changes in equity? a. For each component of equity, the effects of retrospective restatement recognized in accordance with PAS 8. b. For each component of equity, comprehensive income by item. an analysis c. The amount of dividends recognized as distributions to owners during the period and the related amount of dividends per share. d. All of these. of other 7
Exercise 11-8 (Static) Effect of transactions on various financial ratios Indicate the effect that each transaction/event listed here will have on the financial ratio listed opposite it. Use + for increase, – for decrease, and (NE) for no effect. Assume that current assets exceed current liabilities in all cases, both before and after the transaction/event. Transaction/Event Financial Ratio Effect a. Purchased inventory on account. b. Sold inventory for cash, at a profit. c. Issued a 10% stock dividend. d. Issued common stock for cash. Number of days' sales in inventory Inventory tumover Earnings per share Debt ratio e. Sold land at a gain. Return on investment f. Purchased treasury stock for cash. g. Accrued interest on a note payable. h. Accrued wages that have been earned by employees. i. Purchased equipment for cash. j. Issued bonds at an interest rate that is less than the company's ROI. Debt/equity ratio NE Times interest earned Current ratio Plant and equipment turnover Return…
I: Common-size analysis all accounts are presented as percentage of total liabilities in Balance sheet II: Vertical analysis all accounts are presented as percentage of net sales in Income statement. A Both I and II are false В Only Il is true C) Only I is true Both I and II are true
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12. Which two ratios multiplied by each other equal Return on Total Assets? (A) Profit Margin (B) Return on Equity (C) Current Ratio (D) Price Earnings Ratio (E) Total Asset Turnover
Effect of transactions on various financial ratios Indicate the effect that eachtransaction/event listed here will have on the financial ratio listed opposite it, andprovide an explanation for your answer. Use 1 for increase, − for decrease, and (NE)for no effect. Assume that current assets exceed current liabilities in all cases, bothbefore and after the transaction/event.Transaction/Event Financial Ratioa. Purchased inventory on account.b. Sold inventory for cash, at a profi t.c. Issued a 10% stock dividend.d. Issued common stock for cash.e. Sold land at a gain.f. Purchased treasury stock for cash.g. Accrued interest on a note payable.h. Accrued wages that have been earnedby employees.i. Purchased equipment for cash.j. Issued bonds at an interest rate that isless than the company’s ROI.Number of days’ sales in inventoryInventory turnoverEarnings per shareDebt ratioReturn on investmentDebt/equity ratioTimes interest earnedCurrent ratioPlant and equipment turnoverReturn on equity
Liquidity Ratios NWAs financial statements contain the following information: Note: Round answers to two decimal places. Required: 1. What is its current ratio? 2. What is its quick ratio? 3. What is its cash ratio? 4. Discuss NWAs liquidity using these ratios.
RATIO ANALY SIS OF COMPARATI VE FIN ANCIAL STATE MENT S Refer to the financial statements in Problem 24-8A. REQUIRED Calculate the following ratios and amounts for 20-1 and 20-2 (round all calculations to two decimal places): (a) Return on assets (Total assets on January 1, 20-1, were 175,750.) (b) Return on common stockholders equity (Total common stockholders equity on January 1, 20-1, was 106,944.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.) (d) Book value per share of common stock (e) Quick ratio (f) Current ratio (g) Working capital (h) Receivables turnover and average collection period (Net receivables on January 1, 20-1, were 39,800.) (i) Merchandise inventory turnover and average number of days to sell inventory (Merchandise inventory on January 1, 20-1, was 48,970.) (j) Debt-to-equity ratio (k) Asset turnover (Assets on January 1, 20-1, were 175,750.) (l) Times interest earned ratio (m) Profit margin ratio (n) Assets-to-equity ratio (o) Price-earnings ratio (The market price of the common stock was 100.00 and 85.00 on December 31, 20-2 and 20-1, respectively.)