Effect of Transactions on Debt-to-Equity Ratio

The following account balances are taken from the records of Degas Inc.:

Required 1. Use the information provided to compute Degas’ debt-to-equity ratio (round to three decimal points).
2. Determine the effect that each of the following transactions will have on Degas’ debt-to-equity ratio by recalculating the ratio and then indicating whether the ratio is increased, decreased, or not affected by the transaction. (Round to three decimal points.) Consider each transaction independently; that is, assume that it is the only transaction that takes place.

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Current liabilities Long-term liabilities Stockholders' equity $ 25,000 125,000 400,000