(L. OBJ. 4) Effects of business transactions on selected ratios [30-40 min]
Financial statement data of Off Road Traveler Magazine include the following items (dollars in thousands):
Requirements
1. Compute Off Road Traveler’s current ratio, debt ratio, and earnings per share. Round all ratios to two decimal places, and use the following format for your answer:
2. Compute the three ratios after evaluating the effect of each transaction that follows. Consider each transaction separately.
a. Purchased inventory of $43,000 on account
b. Borrowed $123,000 on a long-term note payable
c. Issued 4,000 shares of common stock, receiving cash of $106,000
d. Received cash on account, $6,000
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