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AccountingAccounting (Text Only)26th Edition

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Chapter 1, Problem 1.8APE
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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

Solutions

Chapter
Section
Problem 1DQ
Problem 2DQ
Problem 3DQ
Problem 4DQ
Problem 5DQ
Problem 6DQ
Problem 7DQ
Problem 8DQ
Problem 9DQ
Problem 10DQ
Problem 1.1APE
Problem 1.1BPE
Problem 1.2APE
Problem 1.2BPE
Problem 1.3APE
Problem 1.3BPE
Problem 1.4APE
Problem 1.4BPE
Problem 1.5APE
Problem 1.5BPE
Problem 1.6APE
Problem 1.6BPE
Problem 1.7APE
Problem 1.7BPE
Problem 1.8APE
Problem 1.8BPE
Problem 1.1EX
Problem 1.2EX
Problem 1.3EX
Problem 1.4EX
Problem 1.5EX
Problem 1.6EX
Problem 1.7EX
Problem 1.8EX
Problem 1.9EX
Problem 1.10EX
Problem 1.11EX
Problem 1.12EX
Problem 1.13EX
Problem 1.14EX
Problem 1.15EX
Problem 1.16EX
Problem 1.17EX
Problem 1.18EX
Problem 1.19EX
Problem 1.20EX
Problem 1.21EX
Problem 1.22EX
Problem 1.23EX
Problem 1.24EX
Problem 1.25EX
Problem 1.26EX
Problem 1.27EX
Problem 1.1APR
Problem 1.2APR
Problem 1.3APR
Problem 1.4APR
Problem 1.5APR
Problem 1.6APR
Problem 1.1BPR
Problem 1.2BPR
Problem 1.3BPR
Problem 1.4BPR
Problem 1.5BPR
Problem 1.6BPR
Problem 1COP
Problem 1.1CP
Problem 1.2CP
Problem 1.3CP
BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
1 views

Ratio of liabilities to owner’s equity

The following data were taken from Mesa Company’s balance sheet:

Chapter 1, Problem 1.8APE, Ratio of liabilities to owners equity The following data were taken from Mesa Companys balance

  1. a. Compute the ratio of liabilities to owner’s equity.
  2. b. Has the creditor’s risk increased or decreased from December 31, 2015, to December 31, 2016?

(a)

To determine

Ratio of liabilities to owners’ equity:

This ratio measures the claims of creditors over claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Formula of ratio of liabilities to owners’ equity:

Ratio of liabilities to owners’ equity = Total liabilitiesTotal owners’ equity 

Ratio of liabilities to owners’ equity of Company M

Explanation

Determine ratio of liabilities to owners’ equity of Company M as on December 31, 2015, if total liabilities is $518,000, and total owners’ equity is $370,000.

Ratio of liabilities to owners’ equity = Total liabilitiesTotal owners’ equity=$518,000$370,000=1

(b)

To determine

Whether the creditor’s risk of Company M has increased or decreased from December 31, 2015 to December 31, 2016

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Chapter 1 Solutions

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Ch-1 P-1DQCh-1 P-2DQCh-1 P-3DQCh-1 P-4DQCh-1 P-5DQCh-1 P-6DQCh-1 P-7DQCh-1 P-8DQCh-1 P-9DQCh-1 P-10DQ
Ch-1 P-1.1APECh-1 P-1.1BPECh-1 P-1.2APECh-1 P-1.2BPECh-1 P-1.3APECh-1 P-1.3BPECh-1 P-1.4APECh-1 P-1.4BPECh-1 P-1.5APECh-1 P-1.5BPECh-1 P-1.6APECh-1 P-1.6BPECh-1 P-1.7APECh-1 P-1.7BPECh-1 P-1.8APECh-1 P-1.8BPECh-1 P-1.1EXCh-1 P-1.2EXCh-1 P-1.3EXCh-1 P-1.4EXCh-1 P-1.5EXCh-1 P-1.6EXCh-1 P-1.7EXCh-1 P-1.8EXCh-1 P-1.9EXCh-1 P-1.10EXCh-1 P-1.11EXCh-1 P-1.12EXCh-1 P-1.13EXCh-1 P-1.14EXCh-1 P-1.15EXCh-1 P-1.16EXCh-1 P-1.17EXCh-1 P-1.18EXCh-1 P-1.19EXCh-1 P-1.20EXCh-1 P-1.21EXCh-1 P-1.22EXCh-1 P-1.23EXCh-1 P-1.24EXCh-1 P-1.25EXCh-1 P-1.26EXCh-1 P-1.27EXCh-1 P-1.1APRCh-1 P-1.2APRCh-1 P-1.3APRCh-1 P-1.4APRCh-1 P-1.5APRCh-1 P-1.6APRCh-1 P-1.1BPRCh-1 P-1.2BPRCh-1 P-1.3BPRCh-1 P-1.4BPRCh-1 P-1.5BPRCh-1 P-1.6BPRCh-1 P-1COPCh-1 P-1.1CPCh-1 P-1.2CPCh-1 P-1.3CP

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