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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
E 3-20 Effect of management decisions on ratiosÂ
Most decisions made by management impact the ratios analysts use to evaluate performance. Indicate (by letter) whether each of the actions listed below will immediately increase (I), decrease (D), or have no effect (N) on the ratios shown. Assume each ratio is less than 1.0 before the action is taken.
Current Acid-test Debt to
Action Ratio Ratio Equity Ratio
1. Issuance of long-term bondsÂ
2. Issuance of short-term notesÂ
3. Payment of accounts payableÂ
4. Purchase of inventory on accountÂ
5. Purchase of inventory for cashÂ
6. Purchase of equipment with a 4-year noteÂ
7. Retirement of bondsÂ
8. Sale of common stockÂ
9. Write-off of obsolete inventoryÂ
10. Purchase of short-term investment for cashÂ
11. Decision to refinance on a long-term basis some currently maturing debt
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