Many Companies Have to Monitor Closely Certain Ratios,such as the Current

question 39

Essay

Many companies have to monitor closely certain ratios,such as the current ratio,due to debt covenants.Selected transactions are provided below for a company that uses a perpetual inventory system;sells its merchandise at a selling price that exceeds cost;and had a current ratio of 1.85 and a quick ratio of 1.19 before the event occurred. $\begin{array}{|l|l|l|}\hline & \text { Impact on } & \text { Impact on } \\\hline & \text { Current Ratio } & \text { Ouick Ratio } \\\hline \text { Description of Transaction } & (+) \text { or }(-) \text { or }(\mathbf{0}) & (+) \text { or }(-) \text { or }(0) \\\hline \text { 1. Collected accounts receivable } & & \\\hline \text { 2. Issued common stock for cash } & & \\\hline \text { 4. Paid previously declared cash dividend } & & \\\hline \text { 5. Paid the balance on an account payable } & & \\\hline \text { 6. Purchased a building by issuing a long. } & & \\\hline \text { term note } & & \\\hline \text { 7. Purchased inventory on account } & & \\\hline \text { 8. Purchased current marketable securities for } & & \\\text { cash } & & \\\hline \text { 9. Sold merchandise for cash } & & \\\hline \text { 10. Sold merchandise on account } & & \\\hline\end{array}$ Required:
In the above table,indicate whether each transaction would increase (+),decrease (-),or not affect (0)the company's current ratio and quick ratio.

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Definitions:

Behavioral Segmentation

The process of dividing a market into groups based on consumer behaviors, such as purchasing habits or usage rates.

Demographic Segmentation

The division of a market into segments based on demographic factors such as age, gender, income, education, and family size.

Geographic Segmentation

The division of a market into different geographical units such as countries, states, regions, or cities, allowing for targeted marketing strategies based on location-specific preferences or needs.

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