Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 2, Problem 22E
Calculating and interpreting the debt ratio
A2
Company | Expenses | Total Assets | Net Income | Total Liabilities |
DreamWorks | $22,000 | $ 40,000 | $19,000 | $30,000 |
Pixar | 67.000 | 150.000 | 27,000 | 147,000 |
Universal | 12,000 | 68,000 | 5,000 | 17,000 |
a. Compute the debt ratio for each of the three companies.
b. Which company has the most financial leverage?
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Assume the following relationships for the Brown Corporation:
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Consider this simplified balance sheet for Geomorph Trading:
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a.
Debt-equity ratio
b Long-term debt-to-capital ratio
C.
d. Current ratio
a. What is the company's debt-equity ratio? (Round your answer to 2 decimal places.)
b. What is the ratio of total long-term debt to total long-term capital? (Round your answer to 2 decimal places.)
c. What is its net working capital?
d. What is its current ratio? (Round your answer to 2 decimal places.)
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Assume you are given the following relationships for the Orange Company: Sales/total assets 1.5X Return on assets (ROA) 3% Return on equity (ROE) 5% The Orange Company’s debt ratio is *
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Chapter 2 Solutions
Principles of Financial Accounting.
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