Exercise 10-25A (Algo) Determining the effects of financing alternatives on ratios LO 10-8 Clayton Industries has the following account balances Current assets Noncurrent assets $ 27,000 Current liabilities 76,000 Noncurrent liabilities Stockholders equity $ 12,000 53,000 38,000 eBook Hint The company wishes to raise $32,000 in cash and is considering two financing options. Clayton can sell $32,000 of bonds payable, or it can issue additional common stock for $32,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required 6-1. Compute the current ratio for Clayton's management. (Round your answers to 2 decimal places.) Print References Currently 1 bonds are issued Istock is issued Current Ratio to 1 to 1 10 1 0-2 Compute the debt-to-assets ratio for Clayton's management. (Round your answers to 1 decimal place.) Currently If bonds are issued I stock is issued Debt to Assets Ratio % % 6-2. Compute the debt-to-assets ratio for Clayton's management (Round your answers to 1 decimal place.) Hint D Debt to Assets Ratio Dit Currently Ibonds are issued If stock is issued 0 ferences % b. Assume that after the funds are invested, EBIT amounts to $14.200 Also assume the company pays 54,900 in dividends or $4.900 in interest depending on which source of financing is used. Based on a 40 percent tax rate, determine the amount of the increase in retained earnings that would result under each financing option Additional Retained Earnings Bonds Stock