Question
After completing her first year of operations, Penny Cassidy used a number of ratios to evaluate the performance of Penny's Pool Service & Supply, Inc.
After completing her first year of operations, Penny Cassidy used a number of ratios to evaluate the performance of Penny's Pool Service & Supply, Inc. She was particularly interested in the effects of the following transactions from the last quarter:
A) Paid herself a dividend of $10,000 as the sole stockholder..
B)Recorded advance payments from customers of $2,000..
C)Paid the current months rent in cash, $500..
D)Purchased a new truck for $14,000 and signed a note payable for the whole amount. The truck was not placed in service until January 2015..
E)Recorded depreciation expense on office equipment of $600..
F) Accrued interest expense on the note payable to the bank was $400..
Complete the following table, select the sign of the effects of each transaction on the financial ratio listed. Use + for increase, and for decrease. (Select "NE" if there is no effect.)
Transaction | Net Profit Margin | Total Asset Turnover | Return on Assets |
A | |||
B | |||
C | |||
D | |||
E | |||
F |
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