Indicate the Effect of Each Item on the Particular Ratio

question 79

Essay

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. $\begin{array}{|l|l|l|l|c|}\hline\text { Ratio }&&\text { Ratio Value } & \text { Item } &I,D,or,N\\&&\text { Before the } & \\&&\text { Item Occurred } & \\\hline \text { A. } & \text { Current ratio } & 3.0 & \begin{array}{l}\text { Borrowed money by issuing bonds } \\\text { that mature at the end of } 15 \text { years. }\end{array} & \\\hline \text { B. } & \text { Quick } & 1.0 & \begin{array}{l}\text { Returned damaged inventory to the } \\\text { supplier. The goods were not yet } \\\text { paid for. }\end{array} & \\\hline \text { C. } & \begin{array}{l}\text { Receivable } \\\text { turnover }\end{array} & \begin{array}{c}12 \text { times per } \\\text { year }\end{array} & \begin{array}{l}\text { At the beginning of the current year } \\\text { sales terms were changed from } \\\text { terms of "net due in } 30 \text { days" to } \\\text { "net due in } 60 \text { days" }\end{array} & \\\hline \text { D. } & \begin{array}{l}\text { Earnings per } \\\text { share }\end{array} & \$ 2.00 & \text { Issued a } 50 \% \text { stock dividend. } & \\\hline \text { E. } & \text { Current ratio } & 4.0 & \begin{array}{l}\text { Sold a short-term investment at a } \\\text { gain. }\end{array} & \\\hline \text { F. } & \begin{array}{l}\text { Fixed asset } \\\text { turnover }\end{array} & 1.4 & \text { Sold a building at a loss. } & \\\hline \text { G. } & \text { Profit margin } & .25 & \begin{array}{l}\text { A customer returned goods and } \\\text { received a } \$ 1,000 \text { credit on account. } \\\text { The goods had been sold at a } 30 \% \\\text { gross profit percentage. }\end{array} & \\\hline\end{array}$

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Definitions:

Offer

A proposal presented by one party to another as a basis for negotiations towards a contract, indicating a willingness to enter into an agreement under specified terms.

Time Condition

A provision in a contract that stipulates that certain obligations or conditions must be fulfilled within a specified timeframe.

Flexible Contracts

Employment or service contracts allowing for adaptability in terms of job roles, work hours, and employment periods.

Detailed Contracts

Contracts that explicitly outline all conditions, clauses, obligations, and specifications agreed upon by the parties involved, minimizing ambiguity.