The following information was drawn from the balance sheets of two companies.CompanyEastLiabilities +88,000171,000Equity104,000429,000Assets192,000600,000WestRequireda. Compute the debt-to-assets ratio to measure the level of financial risk of both companies.b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.Complete this question by entering your answers in the tabs below.Required ARequired BCompute the debt-to-assets ratio to measure the level of financial risk of both companies. (Round your answers to 1 decimalplace.)Debt to AssetsCompanyRatioEastWest%< Required ARequired B > The following information was drawn from the balance sheets of two companies.LiabilitiesCompanyEastEquity104,000429,000Assets+%3D192,000600,00088,000171,000WestRequireda. Compute the debt-to-assets ratio to measure the level of financial risk of both companies.b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.Complete this question by entering your answers in the tabs below.Required ARequired BCompare the two ratios computed in requirement a to identify which company has the higher level of financial risk...........!................. ...... ....... ................ ......................... ............... ................... ......................................*.................. ....... ....... ...Which company has the higher level of financial risk.< Required ARequired B >

SOLUTION- FORMULA - DEBT TO ASSET RATIO = TOTAL LIABILITIES / TOTAL ASSETS .

Answered: The following information was drawn…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 17E

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The average liabilities, average stockholders' equity, and average total assets are as follows: 1. Determine the following ratios for both companies, rounding ratios and percentagesto one decimal place: a. Return on total assets b. Return on stockholders' equity c. Times interest earned d. Ratio of total liabilities to stockholders' equity 2. Based on the information in (1), analyze and compare the two companies'solvency and profitability. Comprehensive profitability and solvency analysis Marriott International, Inc., and Hyatt Hotels Corporation are two major owners and managers of lodging and resort properties in the United States. Abstracted income statement information for the two companies is as follows for a recent year (in millions): Balance sheet information is as follows:
Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Ratio of fixed assets to long-term liabilities
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A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and the following data. Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018 (using percentage terms where appropriate and rounding all answers to two decimal places). 2. CONCEPTUAL CONNECTION Explain whether Burchs short-term liquidity is adequate. 3. CONCEPTUAL CONNECTION Discuss whether Burch uses its assets efficiently. 4. CONCEPTUAL CONNECTION Determine whether Burch is profitable. 5. CONCEPTUAL CONNECTION Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. 6. Perform a Dupont analysis (rounding to two decimal places) for 2018 and 2019.
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Klynveld Companys balance sheet shows total liabilities of 94,000,000, total stockholders equity of 75,000,000, and total assets of 169,000,000. Required: Note: Round answers to two decimal places. 1. Calculate the debt ratio. 2. Calculate the debt-to-equity ratio.
You are considering two possible companies for investment purposes. The following data is available for each company. Additional Information: Company A: Bad debt estimation percentage using the income statement method is 6%, and the balance sheet method is 10%. The $230,000 in Other Expenses includes all company expenses except Bad Debt Expense. Company B: Bad debt estimation percentage using the income statement method is 6.5%, and the balance sheet method is 8%. The $140,000 in Other Expenses includes all company expenses except Bad Debt Expense. A. Compute the number of days sales in receivables ratio for each company for 2019 and interpret the results (round answers to nearest whole number). B. If Company A changed from the income statement method to the balance sheet method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). C. If Company B changed from the balance sheet method to the income statement method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). D. What benefits do each company gain by changing their method of bad debt estimation? E. Which company would you invest in and why? Provide supporting details.

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