Indicate the effect of each item on the particular ratio of that row of the schedule.In the last column of the schedule,place the answer of the effect of the item on the ratio.Use the letter I for increase in the ratio,D for decrease in the ratio,and N for no effect on the ratio.Each item is independent of the others.

Question

Indicate the effect of each item on the particular ratio of that row of the schedule.In the last column of the schedule,place the answer of the effect of the item on the ratio.Use the letter I for increase in the ratio,D for decrease in the ratio,and N for no effect on the ratio.Each item is independent of the others.
Indicate the effect of each item on the particular ratio of that row of the schedule.In the last column of the schedule,place the answer of the effect of the item on the ratio.Use the letter I for increase in the ratio,D for decrease in the ratio,and N for no effect on the ratio.Each item is independent of the others.

Fareeza Lokman · Accepted Answer

Final Answer :

A.Cash increases the numerator of current assets.Bonds Payable has no effect.
B.Inventory is not a quick asset.Accounts payable decreases the denominator of the ratio.
C.Receivables will be collected slower.
D.Shares outstanding increases the denominator of the ratio.
E.Cash increases current assets more than the removal of short-term investment decreases current assets.The numerator of the ratio increases.
F.Removing the building from the books reduces the denominator of the ratio.
G.Gross profit decrease of .30 decreases profit margin by more than the existing .25 ratio.

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Learning Objectives

Learning Objectives

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