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The balance sheets for Crosby Inc. and Gretzky Company reflect the following. Crosby Inc Gretzky Inc. $ 18,000 Current liabilities $ 18,000 Long-term liabilities Stockholders' equity 15,000 138,000 Common stock, $5 par 102,000 27,600 6% Preferred stock, $10 par, cumulative 30,000 12,000 Retained earnings 36,000 18,000 Total liabilities and stockholders' equity $201,000 $213,600 Net income, included in above retained earnings amount $20,000 $12,000 Common stockholders' equity, prior year 135,000 54,000 Compute the following ratios, entering each answer rounded to two digits after the decimal; for example, enter 1.42 for 1.424, or 1.43 for 1.425. Crosby Inc. Gretzky Inc. a. Compute the total liabilities-to-equity ratio. b. Compute the return on equity ratio. c. Compute book value per share of common stock. d. Interpret the results. When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio • Indicated by the return on equity ratio Indicated by the book value per share These results indicate that Crosby, as compared to Gretzky, has + Profitability Solvency

The balance sheets for Crosby Inc. and Gretzky Company reflect the following. Crosby Inc Gretzky Inc. $ 18,000 Current liabilities $ 18,000 Long-term liabilities Stockholders' equity 15,000 138,000 Common stock, $5 par 102,000 27,600 6% Preferred stock, $10 par, cumulative 30,000 12,000 Retained earnings 36,000 18,000 Total liabilities and stockholders' equity $201,000 $213,600 Net income, included in above retained earnings amount $20,000 $12,000 Common stockholders' equity, prior year 135,000 54,000 Compute the following ratios, entering each answer rounded to two digits after the decimal; for example, enter 1.42 for 1.424, or 1.43 for 1.425. Crosby Inc. Gretzky Inc. a. Compute the total liabilities-to-equity ratio. b. Compute the return on equity ratio. c. Compute book value per share of common stock. d. Interpret the results. When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio • Indicated by the return on equity ratio Indicated by the book value per share These results indicate that Crosby, as compared to Gretzky, has + Profitability Solvency

FINANCIAL ACCOUNTING
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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Solvency Section on Bottom : Selections are "Higher" or "Lower"

When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio Higher common shareholder investment per share Higher debt relative to equity Higher return on investment to shareholders Lower common shareholder investment per share Lower debt relative to equity Indicated by the return on equity ratio Indicated by the book value per share to Gretzky, has Lower return on investment to shareholders
Transcribed Image Text:When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio Higher common shareholder investment per share Higher debt relative to equity Higher return on investment to shareholders Lower common shareholder investment per share Lower debt relative to equity Indicated by the return on equity ratio Indicated by the book value per share to Gretzky, has Lower return on investment to shareholders
The balance sheets for Crosby Inc. and Gretzky Company reflect the following. Crosby Inc Gretzky Inc. Current liabilities $ 18,000 $ 18,000 Long-term liabilities Stockholders' equity 15,000 138,000 Common stock, $5 par 102,000 27,600 6% Preferred stock, $10 par, cumulative 30,000 12,000 Retained earnings 36,000 18,000 Total liabilities and stockholders' equity $201,000 $213,600 Net income, included in above retained earnings amount $20,000 $12,000 Common stockholders' equity, prior year 135,000 54,000 Compute the following ratios, entering each answer rounded to two digits after the decimal; for example, enter 1.42 for 1.424, or 1.43 for 1.425. Crosby Inc. Gretzky Inc. a. Compute the total liabilities-to-equity ratio. b. Compute the return on equity ratio. c. Compute book value per share of common stock. d. Interpret the results. When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio Indicated by the return on equity ratio Indicated by the book value per share These results indicate that Crosby, as compared to Gretzky, has Profitability Solvency
Transcribed Image Text:The balance sheets for Crosby Inc. and Gretzky Company reflect the following. Crosby Inc Gretzky Inc. Current liabilities $ 18,000 $ 18,000 Long-term liabilities Stockholders' equity 15,000 138,000 Common stock, $5 par 102,000 27,600 6% Preferred stock, $10 par, cumulative 30,000 12,000 Retained earnings 36,000 18,000 Total liabilities and stockholders' equity $201,000 $213,600 Net income, included in above retained earnings amount $20,000 $12,000 Common stockholders' equity, prior year 135,000 54,000 Compute the following ratios, entering each answer rounded to two digits after the decimal; for example, enter 1.42 for 1.424, or 1.43 for 1.425. Crosby Inc. Gretzky Inc. a. Compute the total liabilities-to-equity ratio. b. Compute the return on equity ratio. c. Compute book value per share of common stock. d. Interpret the results. When comparing Crosby Inc. to Gretzky Inc., Crosby Inc. has Indicated by the total liabilities-to-equity ratio Indicated by the return on equity ratio Indicated by the book value per share These results indicate that Crosby, as compared to Gretzky, has Profitability Solvency
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The average of the stockholder's equity was not computed, factored in, nor explained.

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