In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transaction should be considered independently). Required: Indicate the effect that each business transaction or event would have on the ratio listed opposite to it. State the effect in terms of increase, decrease, or no effect on the ratio involved. In all cases, assume that the current assets exceed the current liabilities both before and after the event or transaction. Business Transaction or Event Ratio Effect on Ratio Current ratio 1. Declared a cash dividend. 2. Sold inventory on account at cost. Acid-test ratio Return on equity 3. Issued bonds with an interest rate of 8%. The company's return on assets is 10%. Net income decreased by 10% between last year and this year. Long-term debt remained unchanged. Times interest earned 5. Paid a previously declared cash dividend. Current ratio The market price of the company's common stock dropped from $24.50 $20.00. The 6. Dividend payout ratio dividend paid per share remained unchanged. 7. Obsolete inventory totaling $100,000 was written off as a loss. 8. Sold inventory for cash at a profit. a Changed customer credit terms from 2/10, n/30 to 2/15, n/30 to comply with a change in industry practice. 10. Issued a stock dividend to common stockholders. Inventory turnover ratio Debt-to-equity ratio Accounts receivable turnover ratio Book value per share 11. The market price of the company's common stock increased from $24.50 to $30.00. Book value per share 12. Paid $40,000 on accounts payable. Working capital 13. Issued a stock dividend to common stockholders. 14. Paid accounts payable. Earnings per share Debt-to-equity ratio Acid-test ratio 15. Purchased inventory on account. 16. Wrote off an uncollectible account against the Allowance for Bad Debts. Current ratio The market price of the company's common stock increased from $24.50 to $30.00. 17. Earnings per share remained unchanged. The market price of the company's common stock increased from $24.50 to $30.00. TheDividend vield ratio Price-earnings ratio 18. dividend paid per share remained unchanged. 4. In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transaction should be considered independently). Required: Indicate the effect that each business transaction or event would have on the ratio listed opposite to it. State the effect in terms of increase, decrease, or no effect on the ratio involved. In all cases, assume that the current assets exceed the current liabilities both before and after the event or transaction. Business Transaction or Event Ratio Effect on Ratio Current ratio 1. Declared a cash dividend. 2. Sold inventory on account at cost. Acid-test ratio Return on equity 3. Issued bonds with an interest rate of 8%. The company's return on assets is 10%. Net income decreased by 10% between last year and this year. Long-term debt remained unchanged. Times interest earned 5. Paid a previously declared cash dividend. Current ratio The market price of the company's common stock dropped from $24.50 $20.00. The 6. Dividend payout ratio dividend paid per share remained unchanged. 7. Obsolete inventory totaling $100,000 was written off as a loss. 8. Sold inventory for cash at a profit. a Changed customer credit terms from 2/10, n/30 to 2/15, n/30 to comply with a change in industry practice. 10. Issued a stock dividend to common stockholders. Inventory turnover ratio Debt-to-equity ratio Accounts receivable turnover ratio Book value per share 11. The market price of the company's common stock increased from $24.50 to $30.00. Book value per share 12. Paid $40,000 on accounts payable. Working capital 13. Issued a stock dividend to common stockholders. 14. Paid accounts payable. Earnings per share Debt-to-equity ratio Acid-test ratio 15. Purchased inventory on account. 16. Wrote off an uncollectible account against the Allowance for Bad Debts. Current ratio The market price of the company's common stock increased from $24.50 to $30.00. 17. Earnings per share remained unchanged. The market price of the company's common stock increased from $24.50 to $30.00. TheDividend vield ratio Price-earnings ratio 18. dividend paid per share remained unchanged. 4