Answered: ($ in millions) Surf City Paradise…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Selected financial data for Surf City and Paradise Falls are as follows:

Required:
1. Calculate the debt to equity ratio for Surf City and Paradise Falls for the most recent year. Which company has the higher ratio?
2. Calculate the return on assets for Surf City and Paradise Falls. Which company appears more profitable?
3. Calculate the times interest earned ratio for Surf City and Paradise Falls. Which company is better able to meet interest payments as they become due?

($ in millions)
Surf City
Paradise Falls
2021
2020
2021
2020
Total assets
$19,828
$19,804
$39,161
$38,637
Total liabilities
11,519
11,396
15,232
14,805
Total stockholders' equity
8,309
8,408
23,929
23,832
Sales revenue
$ 7,688
$15,382
Interest expense
356
336
Тах еxpensе
4
Net income
18
1,298

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