Ratio of liabilities to stockholders' equityThe following data were taken from Alvarado Company's balance sheet: Dec. 31. 20Y4Dec. 31, 20Y3Total liabilities$4,085,000$2,880,000Total stockholders' equity4,300,0003,600,000a. Compute the ratio of liabilities to stockholders' equity for each year.b. Has the creditor's risk increased or decreased from December 31,2013, to December 31, 20Y4?

Formula : Ratio of liabilities to stockholders' equity = Total liabilities / Total stockholders'…

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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 13E: Ratio of liabilities to stockholders equity and times interest earned The following data were taken...

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Ratio of liabilities to stockholders' equity
The following data were taken from Alvarado Company's balance sheet:

	Dec. 31. 20Y4	Dec. 31, 20Y3
Total liabilities	$4,085,000	$2,880,000
Total stockholders' equity	4,300,000	3,600,000

a. Compute the ratio of liabilities to stockholders' equity for each year.
b. Has the creditor's risk increased or decreased from December 31,
2013, to December 31, 20Y4?

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