Ratio of liabilities to stockholders' equity : Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations. Ratio of liabilities to stockholders' equity } = Total Liabilities Total Owner's Equity To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

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Answer 1

Question

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

c)

To determine

A more risky company among Company PJ and Company YB.

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Answer 2

Question

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

c)

To determine

A more risky company among Company PJ and Company YB.

Expert Solution & Answer

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Answer 3

Question

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

c)

To determine

A more risky company among Company PJ and Company YB.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

c)

To determine

A more risky company among Company PJ and Company YB.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 5

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

c)

To determine

A more risky company among Company PJ and Company YB.

Answer 6

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

Answer 7

Chapter 1, Problem 4ADM

a)

To determine

Ratio of liabilities to stockholders' equity: Ratio of liabilities to stockholders' equity shows the relationship between the liabilities and the owner's equity. This ratio measures the claims of creditors over the claims of owners in financing the assets. A lower ratio indicates that the company has good ability to pay off the creditors’ obligations.

Ratio of liabilities tostockholders' equity}=Total LiabilitiesTotal Owner's Equity

To Compute: The ratio of liabilities to stockholders' equity of Company PJ and Company YB.

Answer 8

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

Answer 9

b)

To determine

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

Answer 10

c)

To determine

A more risky company among Company PJ and Company YB.

Answer 11

c)

To determine

A more risky company among Company PJ and Company YB.

Answer 12

Expert Solution & Answer

Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains the ratio of liabilities to stockholders' equity, which measures the claims of creditors over owners in financing the assets.

To derive: A conclusion regarding the margin of protection to the creditors from the ratio of liabilities to stockholders' equity of Company PJ and Company YB.

A more risky company among Company PJ and Company YB.

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