Exercise 10-25A (Algo) Determining the effects of financing alternatives on ratios LO 10-8 Clayton Industrles has the following account balances: The company wishes to ralse $48,000 in cash and Is considering two financing options: Clayton can sell $48,000 of bonds payable, or It can issue additional common stock for $48,000. 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. Requlred a.1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. a-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 $16,600. Also assume the company pays $3,000 In dividends or $3,000 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. Exercise 10-25A (Algo) Determining the effects of financing alternatives on ratios LO 10-8 Clayton Industrles has the following account balances: The company wishes to ralse $48,000 in cash and Is considering two financing options: Clayton can sell $48,000 of bonds payable, or It can issue additional common stock for $48,000. 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. Requlred a.1. Compute the current ratio for Clayton's management. Note: Round your answers to 2 decimal places. a-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 $16,600. Also assume the company pays $3,000 In dividends or $3,000 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