(Determining the effects of transactions on ratios, LO 2) Complete the following table by indicating whether the following transactions or economic events would increase, decrease, or have no effect on the financial ratios listed. Consider each item independently. State any assumptions you make. Explain your reasoning.

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Ratio before the transactions/ economic events a. Declaration and payment of preferred shares. b. Write-off of an accounts receivable. c. Sale of goods costing $5,500 for $12,000. Payment is to be made within 45 days. d. Disposal of an asset that was not being used. The asset had a book value of $195,000 when it was disposed of. e. Announcement of a new long-term contract with a new customer. The announcement was unexpected by the capital markets. f. Write-off of obsolete inventory. The company does this each year. Interest coverage ratio Accounts Price-to- Return receivable earnings on turnover ratio Gross margin assets ratio 5.35 5.5 18.5 10% 52.5%