Effects of Events on Financial Measurements
Indicate the Probable Effects $3 \%$

question 123

Essay

Effects of events on financial measurements
Indicate the probable effects of each of the following strategies or events upon the financial measurements of Lindsay Corp. listed below. Use the code letters I = Increase, D = Decrease, and NE = No Effect.
(a) A supplier raised by $3 \%$ the purchase price of several products sold by Lindsay. Lindsay did not change its sales prices for these products.
Gross profit rate $\underline{\quad\quad}$ Current liabilities $\underline{\quad\quad}$

(b) Lindsay began purchasing larger than normal quantities from a particular supplier in order to receive a "volume discount."

Gross profit $\underline{\quad\quad}$ rate Quick ratio $\underline{\quad\quad}$

(c) Lindsay has consistently earned a return on assets of $15 \%$ . Recently the company borrowed money at an interest rate of $10 \%$ to expand its operations. Lindsay expencts its investment of these borrowed funds to earn a return (operating profit) of $20 \%$ .

Return on assets $\underline{\quad\quad}$ Debt Ratio $\underline{\quad\quad}$

(d) Lindsay extended the credit term allowed to customers buying merchandise on account from 30 days to 90 days.

Sales $\underline{\quad\quad}$ Cash collected from customers:
Dollar amount of gross profit (over the next 90 days) $\underline{\quad\quad}$

Dollar amount of gross profit (after the next 90 days) $\underline{\quad\quad}$

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