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 $ 17,000 82,000 Current liabilities Noncurrent liabilities Stockholders' equity $ 10,000 45,000 44,000 The company wishes to raise $38,000 in cash and is considering two financing options: Clayton can sell $38 it can issue additional common stock for $38,000. To help in the decision process, Clayton's management wa effects of each alternative on its current ratio and debt-to-assets ratio. Required a-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 1.70 to 1 8.20 to 1 8.20 to 1 6 e-2. Compute the debt-to-assets ratio for Clayton's management. (Round your answers to 1 decimal place.) 835 points Currently if bonds are issued If stock is issued ebook Debt to Assets Ratio 1207% % b. Assume that after the funds are invested, EBIT amounts to $12.100. Also assume the company pays $3,400 in dividends or $3,400 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 Additional Retained Earnings Bonds Stock