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Discuss how each of the following transactions will affect the financial ratios specified in the table (i. e. increase, decrease, no effect). You are required

Discuss how each of the following transactions will affect the financial ratios specified in the table (i. e. increase, decrease, no effect). You are required to provide the detailed explanations. (3 Marks)

Transaction

Ratio

1. Purchase of equipment on cash.

Asset turnover

2. Recovery of bad debt previously written off.

Quick ratio

3. Paid wages payable.

Return on assets

Word limit: 150

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