Determine whether each transaction improved or hurt Williams’ current ratio and debt ratio. Round…
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(Learning Objective 6: Measuring the effects of transactions on the ratios) Ben Williams Company reported these ratios at December 31, 2008 (dollar amounts in millions):
Current ratio
=
$20/$10
=
2.00
Debt ratio
=
$20/$50
=
0.40
Ben Williams Company completed these transactions during 2009:
a. Purchased equipment on account, $4.
b. Paid long-term debt, $5.
c. Collected cash from customers in advance, $2.
d. Accrued interest expense, $1.
e. Made cash sales, $6.
Determine whether each transaction improved or hurt Williams’ current ratio and debt ratio. Round all ratios to 2 decimal places.
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