Assume a company now has the following financial figures:

Assume there are no taxes.
Indicate whether the following transactions would increase, decrease, or leave unchanged the ratios indicated:
A. Pay 20 of accounts payable with cash:

a. Current ratio

b. Capital structure leverage

c. Profit margin for ROA B. Borrow 500 of cash using a long-term loan:
A. Current ratio B. Capital structure leverage C. Profit margin for ROA D. Assuming income is unchanged, ROA C. Take out a long-term loan and use it to buy machinery, leaving cash unchanged. Assume sales and income are unchanged:

a. Current ratio

b. Capital structure ratio

c. Asset turnover

d. ROA D. Lease machinery, without either recording the machinery as an asset (since you don’t own it) or recording the remaining lease payments as a liability. Again, assume income is unchanged:

a. Current ratio

b. Capital structure ratio

c. Asset turnover

d. ROA

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Accounts receivable Inventory Total current assets Total assets Accounts payable Total current liabilities Total liabilities Total equity 100 50 300 1,000 30 80 400 600 Total revenues Total expenses Net income 5,000 4,800 200