Question
The 2019 annual report for a company includes the following items in its footnotes: a. The useful life of machinery has been increased from 10
The 2019 annual report for a company includes the following items in its footnotes: a. The useful life of machinery has been increased from 10 to 15 years. b. The expected tax rate used to calculate income tax provision has increased from 33% to 38%. c. The company has started to capitalize small tools purchased beginning in 2006. For each of the above, determine the effect (higher, lower, or unchanged) of the change on the ratios listed below for the year 2019 and state the reason for the effect (increase(s) and/or decrease(s) in which accounts cause the change): a. Debt-to-equity b. Return on assets c. Cash Flow from operations
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