Analyze and evaluate liquidity and debt-paying ability
Response to the following problem:
Hermann Company reported these ratios at December 31, 2014 (dollar amounts in millions):
Hermann Company completed these transactions during 2015:
a. Purchased equipment on account, $8
b. Paid long-term debt, $5
c. Collected cash from customers in advance, $7
d. Accrued interest expense, $2
e. Made cash sales, $6
Determine whether each transaction improved or hurt Hermann's current ratio and debt ratio.