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Ratio of liabilities to stockholders' equity and ratio of fixed assets to long-term liabilities Recent balance sheet information for two companies in the food industry, Mondelez International, Inc. and The Hershey Company , is as follows (in thousands): Mondelez Hershey Net property, plant, and equipment $10,010,000 $1,674,071 Current liabilities 14,373,000 1,471,110 Long-term debt 15,574,000 1,530,967 Other long-term liabilities 12,816,000 716,013 Stockholders’ equity 32,215,000 1,036,749 A. Determine the ratio of liabilities to stockholders’ equity for both companies. (Round to one decimal place.) B. Determine the ratio of fixed assets to long-term liabilities for both companies. (Round to one decimal place.) C. Interpret the ratio differences between the two companies.

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Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535

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Chapter
Section
BuyFindarrow_forward

Corporate Financial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781305653535
Chapter 14, Problem 14.15EX
Textbook Problem
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Ratio of liabilities to stockholders' equity and ratio of fixed assets to long-term liabilities

Recent balance sheet information for two companies in the food industry, Mondelez International, Inc. and The Hershey Company, is as follows (in thousands):

  Mondelez Hershey
Net property, plant, and equipment $10,010,000 $1,674,071
Current liabilities 14,373,000 1,471,110
Long-term debt 15,574,000 1,530,967
Other long-term liabilities 12,816,000 716,013
Stockholders’ equity 32,215,000 1,036,749
  • A. Determine the ratio of liabilities to stockholders’ equity for both companies. (Round to one decimal place.)
  • B. Determine the ratio of fixed assets to long-term liabilities for both companies. (Round to one decimal place.)
  • C. Interpret the ratio differences between the two companies.

a)

To determine

Financial Ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

To compute: Ratio of liabilities to stockholders’ equity

Given info: Total liabilities and Stockholders’ equity

Explanation of Solution

Compute ratio of liabilities to stockholders’ equity for M. 

 Ratio of liabilities to stockholders' equity}=Total liabilities (Net)Total stockholders' equity=Currentliabilties + Long-term debt + Other long-term liabilitiesStockholders' equity=$14,873,000+$15,574,000+$12,816,000$32,315,000=43,263,00032,315,000=1.3

Compute ratio of liabilities to stockholders’ equity for H

b)

To determine

To compute: Ratio of fixed assets to long-term liabilities

Given info: Total fixed assets and long-term liabilities.

c)

To determine

To interpret: The ratio differences between the two companies.

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Chapter 14 Solutions

Corporate Financial Accounting
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