Barcain Ltd. has total assets of $1,500,000 and total liabilities of $900,000. The industry average debt-to-equity ratio is 1.50. Required: 1. Calculate Barcain's debt-to-equity (D/E) ratio. 2. Indicate whether Barcain's default risk is higher or lower than the industry average.

Barcain Ltd. has total assets of $1,500,000 and total liabilities of $900,000. The industry average debt-to-equity ratio is 1.50. Required: 1. Calculate Barcain's debt-to-equity (D/E) ratio. 2. Indicate whether Barcain's default risk is higher or lower than the industry average.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 49E

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Question

Please solve the following requirements on these financial accounting question

Barcain Ltd. has total assets of $1,500,000 and total liabilities of
$900,000. The industry average debt-to-equity ratio is 1.50.
Required:
1. Calculate Barcain's debt-to-equity (D/E) ratio.
2. Indicate whether Barcain's default risk is higher or lower than
the industry average.

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