FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781618533111
Author: DYCKMAN
Publisher: Cambridge Business Publishers
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Chapter 1, Problem 20ME
To determine
Compute the amount of equity of Company C and describe whether Company C receives more financing from its owners or non-owners and state the percentage of finance provided.
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The income statement of Small Town, Inc. is as shown below:
Small Town, Inc.
Comparative Income Statement
Year Ended December 31, 2025
(In millions)
Net Sales
Cost of Goods Sold
Gross Profit
Operating Expenses:
O A. 41.89%
O B. 60.81%
O C. 39.19%
O D. 28.38%
$
7,400
2,900
4,500
b. What is the ratio of real assets to total assets for nonfinancial firms in the following table? (Round your answer to 4 decimal places.)
$ Billion
Liabilities and Net Worth
Liabilities
Bonds and mortgages
Bank loans
$ 5,364
758
1,338
Other loans
Trade debt
1,738
Other
4,608
$13,806
Assets
Real assets
Equipment and software
Real estate
Inventories
Total real assets
Financial assets
Deposits and cash
Marketable securities
Trade and consumer credit
Other
Total financial assets
Total
$ Billion % Total
$ 4,402
16.4%
36.3
9,749
1,734
6.5
$15,885
59.1%
Ratio for nonfinancial firms
$ 677 2.5%
1,056
3.9
2,282
8.5
6,968
25.9
$10,983 40.9%
$26,868 100.0%
Total liabilities
Net worth
$13,062
$26,868
% Total
20.0%
2.8
5.0
6.5
17.2
51.4%
48.6%
100.0%
Balance sheet of U.S. nonfinancial corporations
Note: Column sums may differ from total because of rounding error.
Source: Flow of Funds Accounts of the United States, Board of Governors of the Federal Reserve System, September 2018.
The Debt to Equity ratio calculation measures
Group of answer choices
c. How much debt the company has for every dollar of Equity
b. The amount of Assets that are financed by debt
None of the above
a. The ability of the company to pay its’ current obligations
Chapter 1 Solutions
FINANCIAL ACCOUNTING
Ch. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5Q
Ch. 1 - Prob. 6QCh. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10QCh. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - Prob. 19MECh. 1 - Prob. 20MECh. 1 - Prob. 21MECh. 1 - Prob. 24MECh. 1 - Prob. 25MECh. 1 - Prob. 26MECh. 1 - Prob. 27ECh. 1 - Prob. 28ECh. 1 - Prob. 29ECh. 1 - Prob. 30ECh. 1 - Prob. 31ECh. 1 - Prob. 32ECh. 1 - Prob. 33ECh. 1 - Prob. 34ECh. 1 - Prob. 35ECh. 1 - Prob. 36PCh. 1 - Prob. 37PCh. 1 - Prob. 38PCh. 1 - Prob. 39PCh. 1 - Prob. 40PCh. 1 - Prob. 41PCh. 1 - Prob. 42PCh. 1 - Prob. 43PCh. 1 - Prob. 44PCh. 1 - Prob. 45PCh. 1 - Prob. 46CPCh. 1 - Prob. 47CPCh. 1 - Prob. 48CPCh. 1 - Prob. 49CPCh. 1 - Prob. 50CP
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