Effects of Transactions Upon Analytical Measurements
Determine the Immediate Effect

Effects of transactions upon analytical measurements
Determine the immediate effect of each of the transactions described below on the ratio listed beside each transaction. In the blank space to the left of each statement, you are to indicate the effect by writing the appropriate code letter. The code letters are as follows: I = increase the ratio, D = decrease the ratio, and NE = no effect on this ratio.
$\begin{array}{|c|c|}\hline \underline{\quad\quad}& \begin{array}{l}\text { Return on common stockholders' equity }(13 \%) \text { : Issued } 10 \% \text { bonds and } \\\text { invested the proceeds to earn } 12 \% \text {. }\end{array} \\\hline\underline{\quad\quad} & \begin{array}{l}\text { Return on total assets (13\%): Issued } 10 \% \text { bonds and invested the proceeds to } \\\text { earn } 12 \% \text {. }\end{array} \\\hline\underline{\quad\quad} & \begin{array}{l}\text { Accounts receivable turnover ratio ( } 4 \text { times): Shortened credit period from } 60 \\\text { days to } 30 \text { days and raised standards for accepting credit customers. }\end{array} \\\hline\underline{\quad\quad} & \begin{array}{l}\text { Earnings per share of common stock }(\$ 6.25) \text { : Sold common stock held in the } \\\text { treasury at a price above cost. }\end{array} \\\hline\underline{\quad\quad} & \begin{array}{l}\text { Inventory turnover ( } 4 \text { times): Made large purchases increasing the average } \\\text { size of inventory. }\end{array} \\\hline \underline{\quad\quad}& \text { Current ratio (2.1 to } 1) \text { : Collected a large account receivable } \\\hline \underline{\quad\quad}& \begin{array}{l}\text { Quick ratio: Wrote off an uncollectible account receivable against the } \\\text { allowance account. }\end{array} \\\hline\underline{\quad\quad} & \text { Debt ratio: Declared a cash dividend, to be paid in three months. } \\\hline\end{array}$