Effect of transactions on ratios (Learning Objective 4)

Financial statement data of Yankee Traveler magazine include the following items (dollars in thousands):

Requirements 1. Compute Yankee Traveler’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places and use the following format for your answer:

2. Compute the three ratios after evaluating the effect of each transaction that fol¬ lows. Consider each transaction separately.

a. Purchased inventory on account, $46,000

b. Borrowed $125,000 on a long-term note payable

c. Issued 5,000 shares of common stock, receiving cash of $120,000

d. Received cash on account, $19,000 Format your answer as follows:

Transcribed Image Text:

Cash................ $ 22,000 Accounts receivable, net. 82,000 Inventories...... 149,000 Total assets 637,000 Short-term notes payable. 49,000 Accounts payable 103,000 Accrued liabilities...... 38,000 Long-term liabilities 191,000 Net income........ 71,000 Common shares outstanding................. 50,000