The following information was drawn from the balance sheets of two companies: Company East West Assets 205,000 609,000 = Liabilities + 78,000 160,000 Equity 127,000 449,000 Required a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies. b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.
The following information was drawn from the balance sheets of two companies: Company East West Assets 205,000 609,000 = Liabilities + 78,000 160,000 Equity 127,000 449,000 Required a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies. b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Required A
Required B
Compute the debt-to-assets ratio to measure the level of financial risk of both companies. (Round your ans
place.)
Debt to Assets
Ratio
Company
East
West
Required A
Required B
Transcribed Image Text:The following information was drawn from the balance sheets of two companies:
Company
East
West
= Liabilities +
78,000
160,000
Assets
205,000
609,000
Equity
127,000
449,000
Required
a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies.
b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Compute the debt-to-assets ratio to measure the level of financial risk of both companies. (Round your answers to 1 decimal
place.)
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