Debt Ratio:
The comparison of a company's total debts standing against its total assets is known as the debt ratio. This is inversely proportional to the equity balance of the company, as the lesser the leverage utilized by the company, stronger is its equity position and vice-versa. The debt ratio also depicts the degree of risk taken by the company with respect to the asset it holds. The higher the degree of risk being taken by the firm the higher will be its debt ratio. The tendency of the ratio reveals the utilization of resources and availing risks thereof. Also, the end users may apparently analyze the liabilities to be borne by them.
a.
Debt-ratio and return on assets for each company.
b.
Company which relies most heavily on creditor financing.
c.
Company which relies more on equity than debt.
d.
Company which avails more risk than the other companies.
Company with highest return on assets.
f.
Company which is best suited for the investors
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- 1. Calculate the market value of debt and the cost of debt for the company.arrow_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_forward1 Research a company you like to do business with. Look at the following ratios and complete an analysis of the company's performance. Your analysis should answer questions such as but not limited to: (1) is the company solvent (2) is the company highly leveraged (3) has the company been able to utilize their assets efficiently, etc. Ratios: Current Ratio Acid Ratio ROA ROE Debt-to-Equityarrow_forward
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- Which of the following ratios is(are) useful in assessing a company's ability to meet current maturing or short-term obligations? Acid-Test Ratio Debt to Total Assets Ratio a. Yes No b. Acid-Test Ratio Debt to Total Assets Ratio No No O c. Acid-Test Ratio Debt to Total Assets Ratio Y es No d. Acid-Test Ratio Debt to Total Assets Ratio Yes Yesarrow_forwardDiscuss two (2) benefits each of debt and equity as a source of financing to your company.arrow_forwarddebt 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_forward
- Question 5 Discuss how a company evaluates their financial performance, such as their ability to pay debt, profitability, debt, and the rate of return on their investment. Provide the formula, and interpretation of the analysis on the company financial performance.arrow_forward10. A ratio that compares investors’ and creditors’ stake in a company. a) Debt to Equity b) Equity c) Equity Multiplier d) Debt Ratioarrow_forwardFind the working captital, Current ration :1, debt to assets ratio, free cash flow, earning per share for both companies. And aslo which company has better liquidity? and which company has better solvency.arrow_forward
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