Reference no: EM13589798

Bragdon Company is consistently profitable. Its normal financial statement relationships are as follows:

Current ratio 3.5

Inventory turnover 4.5 times

Liabilities to assets ratio 0.8

Required

Determine whether each transaction or event that follows increased, decreased or had no effect on each ratio.

1. Bragdon declared but did not pay a cash dividend.

2. Customers returned invoiced goods for which they had not paid.

3. Accounts payable were paid at year-end.

4. Bragdon recorded both a receivable from an insurance company and a loss on a building due to fire damage.

5. Early in the year, Bradgon increased the selling price of one of its products because customer demand far exceeded production capacity. The number of units sold this year was the same as last year.