Consider each of the following independent transactions. How will each of these transactions affect the ROE, Current Ratio, Debt/Equity ratio and Basic Earnings per Share (+, -, or NC)?

1. Purchase inventory on account.

2. Sell inventory for cash at a profit.

3. Repaid a long-term bank loan.

4. Issued new shares of stock.

5. Issued a 20% stock dividend.

Beginning Ratios: ROE = .60; Current Ratio = 2.5; Debt/Equity = 6.0

	ROE	Current Ratio	Debt/Equity	BEPS
1
2
3
4
5