Grayille Gates, Inc. is planning to increase its average inventory levels. Grayille believes that this policy change

will have no effect on either sales or costs. Any asset changes resulting from this new policy will be offset by a

corresponding and equal change in equity. All else constant, what effect would this new collection policy have

on the firm's:

6.Return on equity (ROE).(INCREASE, DECREASE, NO EFFECT)

7.Quick ratio.(INCREASE, DECREASE, NO EFFECT)

8.Return on assets (ROA).(INCREASE, DECREASE, NO EFFECT)

9.Debt ratio.(INCREASE, DECREASE, NO EFFECT)

USE THE FOLLOWING INFORMATION TO ANSWERS QUESTIONS 10 THROUGH 20

Complete the balance sheet in the table that follows for the Wilson Tent Company for the year ending December 31, 2011 using the following information (if necessary, round figures to the nearest dollar):

Sales $10,000,000

Net profit margin 4.0%

Gross profit margin 25.0%

Return on assets 10.0%

Debt ratio 60.0%

Inventory turnover ratio 7.5x

Notes payable $500,000

Dividend payment in 2011 $250,000

Average collection period 45 days

Days payable ratio 18 days

Quick ratio 2.0x

NOTE: 80 percent of Wilson Tent Company's sales are on credit. The rest are cash sales. Assume a 360-day year for all ratios. On its December 31, 2010 balance sheet, Wilson Tent Company reported Retained earnings of $1,250,000.

Use this information to find the balance sheet below for Wilson Tent Company.

Balance Sheet

For the Year Ending December 31, 2011

Cash???

______________

Notes payable????

______________

Accounts receivable???

______________

Accounts payable????

______________

Inventories?????

______________

Long-term debt????

______________

Common stock??

______________

Fixed assets??

______________

Retained earnings ???

______________

Total Assets??????

______________

Total Liab. & Equity??????

_____________