The Southwick Company has the following balance sheet ($000):

Assets Liabilities and Stockholders ' Equity

Cash $ 500 Accounts payable $ 1,750

Marketable securities 750 Notes payable1,250

Accounts receivable 2,000 Total current liabilities$ 3,000

Inventory 2,500 Long-term debt 1,750

Total current assets $ 5,750 Total liabilities $ 4,750

Plant and equipment (net) 5,000 Common stock ($1 par) 1,000

Total assets $10,750 Contributed capital in excess of par 2,000

Retained earnings 3,000

Total stockholders ' equity $ 6,000

Total liabilities and stockholders ' equity $10,750

Financial Ratios:

Current ratio 1.92

Quick ratio 1.08

Debt-to-equity ratio 0.79

Evaluate the impact of each of the following (independent) financial decisions on Southwick ' s current, quick, and debt-to-equity ratios:

a. The firm reduces its inventories by $500,000 through more efficient inventory management procedures and invests the proceeds in marketable securities.

b. The firm decides to purchase 20 new delivery trucks for a total of $500,000and pays for them by selling marketable securities.

c. The firm borrows $500,000 from its bank through a short-term loan (seasonalfinancing) and invests the proceeds in inventory.

d. Southwick borrows $2 million from its bank through a 5-year loan (interestdue annually, principal due at maturity) and uses the proceeds to expand itsplant.

e. The firm sells $2 million (net) in common stock and uses the proceeds toexpand its plant.