Asked by Kayden Ngenzi on May 12, 2024
Verified
Given the following data:Dec. 31,Year 2 Dec. 31,Year 1Total liabilities $128,250 $120,000Total owner's equity 95,000 80,000
(a) Compute the ratio of liabilities to owner's equity for each year.
(b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?
Liabilities
The financial obligations or debts a company owes to others.
Owner's Equity
The residual interest in the assets of a entity after deducting liabilities, representing what the owners own outright.
Creditors' Risk
The risk faced by lenders that borrowers may default on their debt obligations, potentially leading to financial losses.
- Scrutinize and interpret financial records to evaluate a corporation's economic condition.
- Determine and examine financial ratios to gauge liquidity, indebtedness, and earning capacity.
Verified Answer
NA
Learning Objectives
- Scrutinize and interpret financial records to evaluate a corporation's economic condition.
- Determine and examine financial ratios to gauge liquidity, indebtedness, and earning capacity.
Related questions
Selected Transaction Data of a Business for September Are Summarized ...
Company G Has a Ratio of Liabilities to Stockholders' Equity ...
What Information Does the Income Statement Give to Business Users
The Following Data Were Taken from Miller Company's Balance Sheet: ...
The Total Assets and Total Liabilities of Paul's Pools, a ...