Geisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.
Geisner Inc. has total assets of $1,000,000 and total liabilities of $600,000. The industry average debt-to-equity ratio is 1.20. Calculate Geisner's debt-to-equity ratio and indicate whether the company's default risk is higher or lower than the average of other companies in the industry.
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 8P
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Financial Accounting
Transcribed Image Text:Geisner Inc. has total assets of $1,000,000 and total liabilities of
$600,000. The industry average debt-to-equity ratio is 1.20.
Calculate Geisner's debt-to-equity ratio and indicate whether
the company's default risk is higher or lower than the average of
other companies in the industry.
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