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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Profitability and stockholder ratios
Harley-Davidson, Inc. (HOG),

is a leading motorcycle manufacturer in the United States. The company manufactures and sells a number of different types of motorcycles, a complete line of motorcycle parts, and brand-related accessories, clothing, and collectibles.

The following information is available for three recent years (in millions except per-share amounts

What is the average debt ratio and the ratio of average liabilities to average stockholders' equity for Years 1, 2, and 3?

To determine

Concept Introduction:

Financial Statement analysis is done using the components of the financial statement. These components are Balance sheet, Income statement, Statement of Cash flows, etc. An annual report of a company contains the financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for the whole business of the company.

To Calculate:

The average debt ratio and ratio of average liabilities to average stockholder's equity for each year.

Explanation

The average debt ratio and ratio of average liabilities to average stockholder's equity for each year are calculated as follows:

    Year 3 Year 2 Year 1
    Average Total assets (A) $ 9,760 $ 9,467 $ 9,288
    Average Stockholder's equity (B) $ 2,374 $ 2,959 $ 2,784

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