Chapter 12, Problem 12.1CTFSC

1.

To determine

Long-term liabilities: It is the obligation of the business that have a maturity period of more than one year.

Examples of Long-term Liabilities: Notes Payable, Mortgage Payable, and Bonds Payable

The long-term debt for Corporation S.

2.

To determine

Debt to equity ratio: Debt to equity ratio is used to evaluate the relationship between the total liabilities and total equity of the company. Debt to equity ratio helps the company to determine the proportion of debt and equity. When the ratio is greater than 1, then it is higher and thus, company faces higher risk.

Debt to equity ratio is calculated by using the following formula:

$\text{Debt to equity}=\frac{\text{Total liabilities}}{\text{Total equity}}$

To calculate: Corporation S’s debt to equity ratio at September 29, 2013.

To determine

To Compare: Corporation S’s Debt to equity ratio to Corporation G’s debt to equity ratio.