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.
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 8P
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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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