Ratios Daley, Inc. is consistently profitable. Daley’s normal financial statement relationships are as follows:
|
I. Current ratio: |
3 to 1 |
|
II. Inventory turnover: |
4 times |
|
III. Total debt/total assets ratio: |
0.5 to 1 |
In 2007, Daley was involved in the following transactions and events:
1. Daley issued a stock dividend.
2. Daley declared, but did not pay, a cash dividend.
3. Customers returned invoiced goods for which they had not paid.
4. Accounts payable were paid on December 31, 2007.
5. Daley recorded both a receivable from its insurance company and a loss from fire damage to a factory building.
6. Early in 2007, Daley increased the selling price of one of its products that had a demand in excess of capacity. The number of units sold in 2006 and 2007 was the same.
Required
For items 1 through 6, determine whether each 2007 transaction or event increased (I), decreased (D), or had no effect (N) on each of the 2007 ratios.