a.
Concept Introduction:
Debt ratio: The debt ratio measures the percentage of shares financed by debt, the higher debt ratio is considered riskier for the business, because higher debt ratio indicates the larger portion of assets are funded by external debt, it is computed as total liabilities divided by the total of assets.
The Debt ratio for A in the current year and the prior year.
b.
Concept Introduction:
Debt ratio: Debt ratio measures the percentage of shares financed by debt, the higher debt ratio is considered riskier for the business, because a higher debt ratio indicates a larger portion of assets are funded by external debt, it is computed as total liabilities divided by the total of assets.
The company has a high degree of financial leverage.
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Chapter 2 Solutions
FINANCIAL+MANAG.ACCT.(LOOSE)-W/CONNECT
- debt service ratio measures? A. Profitability of the business B. The impact of debt funding to equity holders C. Ability of the company to pay interest and principal on the due dates D. Tax saved due to borrowingarrow_forwardEvaluate the company's perfomance and position using financial ratio analysisarrow_forwardHelp me pleasearrow_forward
- What is the benefit of published financial statements for companies and the ratio analysis?arrow_forwardBased on the balance sheet and income statement ATTACHED; 1. what is the net profit margin 2. what is the Debt/Equity Ratio 3. Debtor Daysarrow_forwardEvaluate the company’s solvency and capital structure using leverage ratios and interpret your findings using the following ratios marks):a. Debt Ratiob. Equity Ratioc. Debt to Equity Ratiod. Long term debt to total capitalizatione. Times Interest Earned Ratioarrow_forward
- 1. Download the financial statements of any company and do the following analysis? a) Calculate and Comment on the gearing ratio of the companies? b) Write a note on the nature of the capital structure of the company and highlight the importance of leverage in capital structure. please mention the reference at the endarrow_forwardWhat do the liquldity ratlos tell you In the financlal analysis? 1 The capital structure of a company 2 The profitability of the company 3. The efficiency of inventory 4. The company's ability to pay off debt obligations 5. Ratios analysisarrow_forwardThe current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.arrow_forward
- The debt to assets ratio measures the proportion of interest paid relative to dividends paid. the company's profitability. O whether interest can be paid on debt in the current year. O the percentage of the total assets provided by creditors.arrow_forwarda. Compute the debt ratio for each of the three companies. b. Which company has the most financial leverage?arrow_forwardWhat is the purpose of published financial statements for companies and the ratio analysis?arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
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