EFFECT INCREASE DECREASE

NUMERATOR Increase Decrease

DENOMINATOR Decrease Increase

*check sa formula kung ano ung maapektuhan ng transaction/event *magtry kayo sa calcu ng values para icheck kung tama yung effect *pag nagincrease ang denominator bababa ang ratio *pag nagdecrease ang denominator tataas ang ratio

Business Transaction or Event 1. Declared a cash dividend 2. Sold inventory on account 3. Issued bonds with an interest rate of 8%. The company's return on assets is 10%

Ratio Current Ratio Acid test ratio Return on common stockholders' equity

Effect Decrease Increase Decrease No Effect No Effect Increase Decrease No Effect

Reason Declaration of cash dividends will increase so current liabilities hence current ratio will decrease. Increase in accounts receivable will increase the ratio. Issuance of bonds will increase interest expense and increase in expense will decrease net income. Decrease in cash will lead to decrease in liabilty (dividends payble). Market price of common stock doesnt affect the dividends per share or earning per share. The average finished goods inventory will decrease therefore the ratio will increase. Equity will increase due to increase of profit. The change is only on the number of dates therefore amount of discount and payment is the same. Stockholder's equity will decrease due to decrease in Retained Earnings because you've declared an issuance of dividends.

4. Paid a previously declared dividend Current Ratio 5. The market price of the company's common stock increased from 24 1/2 to 30. The dividend paid per share Dividend payout ratio ** remained unchanged. 6. Obsolete inventory totaling $100,000 was written off Inventory turnover ratio as a loss 7. Sold inventory for cash at a profit. Debt to equity ratio 8. Changed customer credit terms from 2/10, n/30 to 2/15, n/30 to comply with a change in industry practice Accounts receivable turnover ratio

9. Issued a dividend to common stockholders

Book value per share

Decrease

10. The market price of the company's common stock increased from 24.5 to 30 11. Paid $40,000 on accounts payable 12. Issued a common stock dividend to common stockholders 13. Paid accounts payable 14. Purchased inventory on account 15. Wrote off uncollectible account against allowance for bad debts 16. The market price of the company's common stock increased. Earnings for share remain unchanged 17. The market price of the company's common stock increased. The dividend paid per share remained unchanged.

Book value per share Working capital Earnings per share Debt to equity ratio Acid test ratio Current Ratio Price earnings ratio

No Effect No Effect Decrease Decrease Decrease No Effect Increase

Market price has no bearing on Book value per share. Reduction of cash will also reduce your accounts payable. Number of common shares outstanding will increase hence decrease in earnings per share. Debt will decrease. Current liabilties will increase due to purchase on account Current assets will remain the same. Increase in market price will increase the market price per share .

Dividend yield ratio ***

Decrease

Increase in market price will decrease the ratio.