4-9 Suppose you were comparing a discount merchandiser with a high-end merchandiser. Suppose further that both companies had identical ROEs. If you applied the DuPont equation to both firms, would you expect the three components to be the same for each company? If not, explain what balance sheet and income statement items might lead to the component differences.

4-10 Indicate the effects of the transactions listed in the following table on total current assets, current ratio, and net income. Use (+) to indicate an increase, (-) to indicate a decrease, and (0) to indicate either no effect or an indeterminate effect. Be prepared to state any nec- essary assumptions and assume an initial current ratio of more than 1.0. (Note: A good ac- counting background is necessary to answer some of these questions; if yours is not strong, answer just the questions you can.)

Total Current Effect on Current Assets Ratio Net Income a.

Cash is acquired through issuance of additional common stock

f. Merchandise is sold on credit

h. A cash dividend is declared and paid i. Cash is obtained through short-term bank loans

m. Current operating expenses are paid

q. Accounts receivable are collected

s. Merchandise is purchased on credit