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Q4-12E

Expert-verified
Found in: Page 211

### Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

## Step 3: Impact on ratios

1. Return on the asset will decline because the numerator and denominator used to calculate the ratio will decline.
2. Debt ratio will increase because of a decrease in the value of total assets.
3. Current ratio will also decrease due to a decrease in the inventory of the business entity.
4. Quick ratio will not be affected because inventory is not included in the quick ratio calculation.