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 providethe detailed explanations(4 Marks)

Transaction

Ratio

1.Achange in accounting method for depreciation from straight line to diminishing balance

Profit margin

2.Wrote off a bad debt using direct write-off method

Current ratio

3.Collected an account receivable

Average collection period4.Recognising a loss through obsolescence of certain inventory items.

Quick ratio

Word limit: 250