Exercise 10-25A Determining the effects of financing alternatives on ratios LO 10-8 Clayton Industries has the following account balances: Current assets Noncurrent assets $ 12,000 73,0 Current liabilities Noncurrent liabilities Stockholders' equity $ 14,000 54,000 22,000 The company wishes to raise $45,000 in cash and is considering two financing options: Clayton can sell $45,000 of bonds payable, or it can issue additional common stock for $45,000. 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 0-1. Compute the current ratio for Clayton's management. (Round your answers to 2 decimal places.) Currently If bonds are issued If stock is issued Current Ratio to 1 to 1 to 1 I --2. Compute the debt-to-assets ratio for Clayton's management (Round your answers to 1 decimal place.) Currently if bonds are issued if stock is issued Debt to Assets Ratio % % % b. Assume that after the funds are invested. EBIT amounts to $17,900. Also assume the company pays $5,000 in dividends or $5.000 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