Sung Corporation, a clothing retailer, engaged in the transactions listed in the first column of the table below. Opposite each transaction is a ratio and space to mark the effect of each transaction on the ratio.
Effect
Transaction Ratio Increase Decrease None
a. Issued common stock for cash. Asset turnover
b. Declared cash dividend. Current ratio
c. Sold treasury stock. Return on equity
d. Borrowed cash by issuing note payable. Debt to equity ratio
e. Paid salaries expense. Inventory turnover
f. Purchased merchandise for cash. Current Ratio
g. Sold equipment for cash. Receivable Turnover
h. Sold merchandise on account. Quick Ratio
i. Paid current portion of long-term debt. Return on Assets
j. Gave sales discount. Profit Margin
k. Purchased marketable securities for cash. Quick Ratio
l. Declared 5% stock dividend. Current Ratio
m. Purchased a building. Free Cash Flow