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Page 283 2. Complete the following table, indicating the sign of the effects of each transaction on the financial ratio listed for the first
Page 283 2. Complete the following table, indicating the sign of the effects of each transaction on the financial ratio listed for the first year of operations. Use + for increase, - for decrease, and NE for no effect. a. etc. Transaction Net Profit Margin Total Asset Turnover Return on Assets Evaluating the Impact of Transactions on Statement Categories and Ratios After completing her first year of operations, Penny Cassidy used a number of ratios to evaluate the performance of Penny's Pool Service & Supply, Inc. She was particularly interested in the effects of the following transactions from the last quarter: a. Paid herself a dividend of $10,000 as the sole stockholder. b. Recorded advance payments from customers of $2,000. c. Paid the current month's rent in cash, $500. d. Purchased a new truck for $14,000 and signed a note payable for the whole amount. The truck was not placed in service until January of the second year of operations. e. Recorded depreciation expense on office equipment of $600. f. Accrued interest expense on the note payable to the bank was $400.
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