Answers for B, D, F

6:45 PM Sat May 2 (20) 9. The Pioneer Company has the following balance sheet: Cash Marketable securities Accounts receivable Inventory Total current assets Plant & equipment (net) Total assets S 500 700 5.150 10.650 $ 17,000 9750 $26.750 Liabilities & Stockholders' Equity Accounts payable Notes payable Total current liabilities Long-term debt Total liabilities Common Stock (S1 par) Contributed capital in excess of par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1.750 20.00 $ 3,750 8.000 $11.750 1,000 4,000 10.000 $15.000 $26.750 453 Financial Ratios Current ratio Quick ratio Debt-to-equity ratio Return on Equity 1.69 0.78 20% Calculate the new values for the current, quick, and debt-to equity ratios, and the return on equity, due to the immediate impact of each of the following financial decisions; in each case, go back to the original numbers and then answer the question. a. The firm reduces its inventories by $500 through more efficient inventory management procedures and invests the proceeds in marketable securities. b. The firm decides to purchase 20 new delivery trucks for a total of $500 and pays for them by selling marketable securities c. The firm borrows $500 from its bank through a short-term loan (seasonal financing) and invests the proceeds in inventory. d. Pioneer borrows $2,000 from its bank through a 5-year loan interest due annually, principal due at maturity) and uses the proceeds to expand its plant. e. The firm issues $2,000 (net) in common stock and uses the proceeds to expand its plant f. The firm gets a long-term loan of $1,000 and uses the proceeds to buy back $1,000 of its outstanding Common Stock