E 3-20 Effect of management decisions on ratios LO3-8 Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (I), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken. \begin{tabular}{|lll|} \hline \multicolumn{1}{|c}{ Action } & Current Ratio & Acid-Test Ratio \\ \hline 1. Issuance of long-term bonds to Equity Ratio \\ 2. Issuance of short-term notes \\ 3. Payment of accounts payable \\ 4. Purchase of inventory on account \\ 5. Purchase of inventory for cash \\ 6. Purchase of equipment with a 4-year note \\ 7. Repayment of long-term notes payable \\ 8. Issuance of common stock \\ 9. Payment for advertising expense \\ 10. Purchase of short-term investment for cash \\ 11. Reclassification of long-term notes \\ payable to current notes payable \end{tabular} E 3-20 Effect of management decisions on ratios LO3-8 Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (I), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken. \begin{tabular}{|lll|} \hline \multicolumn{1}{|c}{ Action } & Current Ratio & Acid-Test Ratio \\ \hline 1. Issuance of long-term bonds to Equity Ratio \\ 2. Issuance of short-term notes \\ 3. Payment of accounts payable \\ 4. Purchase of inventory on account \\ 5. Purchase of inventory for cash \\ 6. Purchase of equipment with a 4-year note \\ 7. Repayment of long-term notes payable \\ 8. Issuance of common stock \\ 9. Payment for advertising expense \\ 10. Purchase of short-term investment for cash \\ 11. Reclassification of long-term notes \\ payable to current notes payable \end{tabular}