1.
Concept Introduction
Debt-to-equity Ratio: The debt-to-equity (D/E) ratio measures a company's reliance on debt as the total liabilities are compared with the company’s shareholder equity. When the company has a larger D/E ratio, this denotes greater risk whereas when there is a low D/E ratio, this states that the company is not expanding well by using its funds.
The debt-to-equity ratio for both Company A and Company G for the current and prior years.
2.
Concept Introduction
Debt-to-equity Ratio: The debt-to-equity (D/E) ratio measures a company's reliance on debt as the total liabilities are compared with the company’s shareholder equity. When the company has a larger D/E ratio, this denotes greater risk whereas when there is a low D/E ratio, this states that the company is not expanding well by using its funds.
The company having a less risky financial structure.
3.
Concept Introduction
Debt-to-equity Ratio: The debt-to-equity (D/E) ratio measures a company's reliance on debt as the total liabilities are compared with the company’s shareholder equity. When the company has a larger D/E ratio, this denotes greater risk whereas when there is a low D/E ratio, this states that the company is not expanding well by using its funds.
To state: Whether the debt to equity ratio is less risky or riskier than compared to the average industry ratio.
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Chapter 10 Solutions
FINANCIAL+MANAG.ACCT.
- Liquidity Ratios Provide a brief definition of what liquidity ratios mean to the profitability of a company. What are the differences between Samsung and Apple in relationship to each of the ratios? What do the ratios mean to the company’s profitability? Is it good or bad?arrow_forward1."Other things being equal, do both companies appear to have the ability to meet their obligations as measured by the debt to equity ratio?2.Based solely on the times interest earned ratios, do you reach the same conclusion as in Requirement 1?3.Is the margin of safety provided to creditors by Discount Goods improving or declining in recent years as measured by the average times interest earned ratio?" Please do not copy and paste some other solutions from here.arrow_forwardLong-term solvency refers to a company’s ability to pay its long-term obligations. Financing ratios provideinvestors and creditors with an indication of this element of risk.Required:1. Calculate the debt to equity ratio for AGF for 2018. The average ratio for the stocks listed on the New YorkStock Exchange in a comparable time period was 1.0. What information does your calculation provide aninvestor?2. Is AGF experiencing favorable or unfavorable financial leverage?3. Calculate AGF’s times interest earned ratio for 2018. The coverage for the stocks listed on the New YorkStock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF’s risk?arrow_forward
- Do npt give image formatarrow_forwardAnalyzing the ability to pay liabilities Big Beautiful Photo Shop has asked you to determine whether the company’s ability to pay current liabilities and total liabilities improved or deteriorated during 2018. To answer this question, you gather the following data: Compute the following ratios for 2018 and 2017, and evaluate the company’s ability to Pay its current Liabilities and total liabilities: a. Current ratio b. Cash ratio c. Acid-test ratio d. Debt ratio e. Debt to equity ratioarrow_forwardIf given the opportunity, in which of the firms would you invest based on the result of your analysis of both companies and the comparison with the industry? If you would not invest, explain your reasons according to the results obtained. Company Name: Year 2018 Chemicals and Allied Products Industry Ratios ………….. Solvency or Debt Ratios Merck J&J 2018 Debt ratio 0.67 0.61 0.47 Debt-to-equity ratio 0.93 0.51 0.38 Interest coverage ratio 12.27 18.91 -9.43 Liquidity Ratios Current ratio 1.17 1.47 3.47 Quick ratio 0.92 1.16 2.12 Cash ratio 0.40 0.63 2.24 Profitability Ratios Profit margin 14.64% 18.75% -93.4% ROE (Return on equity), after tax 23.03% 25.60% -248.5 ROA (Return on assets) 7.49% 10.00% -146.5 Gross margin 68.06% 66.79% 55.3% Operating margin (Return on sales) 19.62% 24.27%…arrow_forward
- Give your insights into the relative solvency or stability of the company (as benchmarked with the competitors) using the following ratios: debt ratio times interest earned ratio debt - equity ratioarrow_forwardIf you were a bank loan officer who was analyzing whether or not to loan more money to Webb, which of the ratios calculated in parts a and b is most relevant to your analysis? (Select the best choice below.)arrow_forwardNonearrow_forward
- Give typed solutionarrow_forwardBalance Sheet: Assets Current Assets 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Cash and cash equivalents Net receivables Inventory 293 300 255 232 401 362 385 460 374 342 437 306 Other current assets 60 43 53 45 Total Current Assets 1,128 1,047 1,130 1,043 Long-term investments 128 97 200 Property, plant, and equipment 979 991 995 1,052 Goodwill 744 748 736 742 Other assets 777 831 902 797 Total Assets 3,756 3,714 3,763 3,834 Liabilities Current Liabilities Accounts payable 876 1,467 922 980 Short/current long-term debt 410 2 173 288 Other current liabilities Total Current Liabilities 1,286 1,469 1,095 1,268 Long-term debt 2,381 2,124 474 475 Other liabilities 435 574 559 551 Total Liabilities 4,102 4,167 2,128 2,294 Total Shareholder's Equity - 346 - 453 1,635 1,540 Total Liabilities and Shareholder's Equity 3,756 3,714 3,763 3,834arrow_forwardPlease correct answer and don't use hand ratingarrow_forward