Answered: Long-Term Solvency Analysis The…

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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Long-Term Solvency Analysis

The following information was taken from Station Company's balance sheet:

Fixed assets (net) $764,400
Long-term liabilities 364,000
Total liabilities 1,656,200
Total stockholders' equity 1,274,000
Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity. If required, round your answers to one decimal place.

a. Ratio of fixed assets to long-term liabilities fill in the blank 1
b. Ratio of liabilities to stockholders' equity fill in the blank 2

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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