The following data were taken from Miller Company's balance sheet: Dec. 31, Year 2 Dec. 31, Year 1 Total liabilities $ 150 , 000 $ 105 , 000 Total owner’s equity 75 , 000 60 , 000 \begin{array}{lcc} & ext { Dec. 31, Year } 2 & ext { Dec. 31, Year 1 } \ ext { Total liabilities } & \$ 150,000 & \$ 105,000 \ ext { Total owner ' s equity } & 75,000 & 60,000\end{array} Total liabilities Total owner’s equity Dec. 31, Year 2 $150 , 000 75 , 000 Dec. 31, Year 1 $105 , 000 60 , 000 (a) Compute the ratio of liabilities to owner's equity. Round your answer to one decimal place.(b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

Question

The following data were taken from Miller Company's balance sheet:​​    Dec. 31, Year  2  Dec. 31, Year 1   Total liabilities  $ 150 , 000 $ 105 , 000  Total owner’s equity  75 , 000 60 , 000 \begin{array}{lcc}  &  	ext { Dec. 31, Year } 2  &  	ext { Dec. 31, Year 1 } \	ext { Total liabilities }  &  \$ 150,000  &  \$ 105,000 \	ext { Total owner ' s equity }  &  75,000  &  60,000\end{array}  Total liabilities   Total owner’s equity  ​  Dec. 31, Year  2 $150 , 000 75 , 000 ​  Dec. 31, Year 1  $105 , 000 60 , 000 ​   (a) Compute the ratio of liabilities to owner's equity. Round your answer to one decimal place.(b) Has the creditors' risk increased or decreased from December 31, Year 1, to December 31, Year 2?

Christian Bravo · Accepted Answer

Final Answer : (a) 12/31/Year 2: $150,000/$75,000 = 2.012/31/Year 1: $105,000/$60,000 = 1.8​(b) Increased

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