Chapter 9, Problem 3AP

1.

To determine

Calculate the debt to equity ratio for the past two years, and identify whether the ratio increase or decrease in the most recent year.

2.

To determine

Calculate the return on assets for the most recent year, and identify whether the return on assets exceeds the cost of borrowing of 4% approximately.

3.

To determine

Review the balance sheet and note 9 to the financial statements based on this information how you would rate the bankruptcy risk of B.