Winchester Industries has the following account balances:

Current Assets$20,000

Noncurrent Assets80,000

Current Liabilities10,000

Noncurrent Liabilities50,000

Stockholders' Equity40,000

The company wishes to raise $40,000 in cash and is considering two financing options. Either it can sell $40,000 of bonds payable, or it can issue $40,000 of additional common stock. Which of the following statements is correct regarding how the financing alternatives will affect its ratios?