Question
Bullmoose Industries had the following ratios based on its 2020 financial statements. 1. Current ratio 2.5 2. Acid Test ratio 1.1 3. Accounts Receivable Turnover
Bullmoose Industries had the following ratios based on its 2020 financial statements.
1. Current ratio 2.5
2. Acid Test ratio 1.1
3. Accounts Receivable Turnover 9.3 times
4. Inventory Turnover 12.5 times
5. Total Debt to Total Assets 55%
6. Profit Margin 4.5%
7. Return on Assets 10%
8. Return on Common Stockholders Equity 28.2%
During 2021, the following selected transactions and events occurred
- Paid a cash dividend on common stock, previously declared in 2020
- Sold inventory on account at a profit
- Paid an Accounts Payable
- Recorded depreciation for the year
- Sold common stock to the public
REQUIRED: Consider items (a)-(e) individually, indicate the effect (increase, decrease, no effect) on each of the preceding ratios.
| a | b | c | d | e |
Current |
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Acid test |
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A/R Turnover |
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Inventory Turnover |
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Debt to Assets |
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Profit margin |
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Return on Assets |
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Return on Common Stockholders Equity |
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