11. The effect of transactions on ratios You've been asked to tutor Arabelis, a finance student who doesn t feel comfortable about her understanding of the relationship between a companys business activities, its financial accosints, and the compony's financial ratios. To better appreciate trese relationships, you've created the following exercises for Arabelis to complete. The purpose of these exercises is to helo Arabelia (1) understand the effect of business transactions on financial statement-such as balance sheet and income statement-accounts and (2) how these changes in the numerators and denominators of financial ratios affect the ratios' values. Mowever, before using these exeroses in your tutoring session laser today, youll want to run the caloulations on the following two business transactions, to verify the accuracy of your answers. To provide a consistent frame of reference for the company's financis statements and ratios, assume that the following balance sheet and income statement reflect the company's pretransaction condition and performance