Exercise 1025A (Algo) Determining the effects of financing alternatives on ratios LO 108 Clayton Industries has the following account balances: The company wishes to ralse $49,000 in cash and is considering two financing optlons: Clayton can sell $49,000 of bonds payable, or it can issue additional common stock for $49,000. 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 a-1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. o-2. Compute the debt-to-assets ratio for Clayton's management Note: Round your answers to 1 decimal place. b. Assume that after the funds are invested. EBIT amounts to $18,300. Also assume the company pays $4,400 in dividends or $4,400 in interest depending on which source of financing is used. Based on a 30 percent tax rate, determine the amount of the increase in retained earnings that would result under each financing option