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Riverdale Manufacturing has total assets of $2,500,000 and total liabilities of $1,400,000. The industry average debt-to-equity ratio is 0.85. Calculate Riverdale'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.

Riverdale Manufacturing has total assets of $2,500,000 and total liabilities of $1,400,000. The industry average debt-to-equity ratio is 0.85. Calculate Riverdale'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.

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 8P
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Riverdale Manufacturing has total assets of $2,500,000 and total liabilities of $1,400,000. The industry average debt-to-equity ratio is 0.85. Calculate Riverdale'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.
Transcribed Image Text:Riverdale Manufacturing has total assets of $2,500,000 and total liabilities of $1,400,000. The industry average debt-to-equity ratio is 0.85. Calculate Riverdale'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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