a

b

The management of a toy retailer was experiencing a strong increase in the demand for several of its toys. Because of this, it decided to increase the price of these toys even though the cost to buy each toy from suppliers remained the same. The number of toys sold increased despite the price hike. As demand increased, the company found it harder to maintain normal levels of inventory for these toys because they sold so quickly. Inventory is the major asset of the company, accounting for almost 80% of its total assets. The company has no receivables. During this time the employees' union negotiated a salary increase that exceeded the benefit received from increasing the price of the toys and selling more of these products. Also, interest rates on the company's loans were increased during the year. The interest rate increase occurred because the company borrowed more non-current debt to pay for the salary increase and to maintain cash at normal levels. The company also maintained its current liabilities at the same level as in prior years. The board is optimistic about the future so, for the first time, the company declared and paid a dividend. For each ratio listed below, state whether the ratio will increase, decrease, or remain unchanged because of the overall effect of the events described above. a. Inventory turnover b. Days in inventory c. Current ratio d. Asset turnover e Gross profit margin e. Gross profit margin f. Profit margin g. Return on assets h. Debt to total assets 1. Times interest earned ... J. Return on common shareholders' equity k. Payout ratio An internal user is not involved in managing a company. does not have access to internal accounting information. is any employee in the company. includes company officers