Question: Use the balance sheets from Suzanne s Hotels in E10 19A
Use the balance sheets from Suzanne’s Hotels in E10- 19A to compute the debt- to- equity ratio for 2011 and 2010. Suppose you calculated a debt ratio using debt plus equity as the denominator. Which ratio— debt- to- equity or debt- to- debt plus equity— seems easiest to interpret? As an investor, do you view the “trend” in the debt- to- equity ratio as favorable or unfavorable? Why?
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