Northstar Corporation has total assets of $3,500,000 and total liabilities of $2,100,000. The industry average debt-to-equity ratio is 1.75. Calculate Northstar's debt-to-equity ratio and determine whether the company's default risk is higher or lower than the average of other companies in the industry.
Northstar Corporation has total assets of $3,500,000 and total liabilities of $2,100,000. The industry average debt-to-equity ratio is 1.75. Calculate Northstar's debt-to-equity ratio and determine 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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Transcribed Image Text:Northstar Corporation has total assets of $3,500,000 and total liabilities of
$2,100,000. The industry average debt-to-equity ratio is 1.75. Calculate
Northstar's debt-to-equity ratio and determine whether the company's default
risk is higher or lower than the average of other companies in the industry.
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