following balance sheet:

Assets Liabilities & Stockholders Equity

Cash $ 500 Accounts payable $ 1,750

Marketable securities 700 Notes payable 3,250

Accounts receivable 5,150 Total current liabilities $ 5,000

Inventory $ 9,650 Long-term debt 16,000

Total current assets $ 16,000 Total liabilities $ 21,000

Plant & equipment (net) 19,000 Common Stock ($1 par) 1,000

Total assets $ 35,000 Contributed capital in excess of par 4,000

Retained earnings 9,000 Total stockholders equity $14,000

Total liabilities and

stockholders equity $35,000

Financial Ratios______________________

Current ratio 3.20

Quick ratio 1.27

Debt-to-equity ratio 1.50

ROE 22%

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Calculate the new values for the current, quick, and debt-to equity ratios and the ROE due to the immediate impact of each of the following financial decisions; in each case, go back to the original numbers and then answer the question.

1. The firm reduces its inventories by $500 through more efficient inventory management procedures and invests the proceeds in marketable securities.
2. The firm decides to purchase 20 new delivery trucks for a total of $500 and pays for them by selling marketable securities.
3. The firm borrows $500 from its bank through a short-term loan (seasonal financing) and uses the proceeds to buy inventory.
4. Pioneer borrows $2,000 from its bank through a 5-year loan (interest due annually, principal due at maturity) and uses the proceeds to expand its plant.
5. The firm issues $2,000 (net) in common stock and uses the proceeds to expand its plant
6. The firm gets a long-term loan of $1,000 and uses the proceeds to buy back $1,000 of its outstanding Common Stock.