a. Calculate the debt ratio and the return on assets using the year-end information for each of

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a. Calculate the debt ratio and the return on assets using the year-end information for each of the following six separate companies ($ thousands).

a. Calculate the debt ratio and the return on assets

b. Of the six companies, which business relies most heavily on creditor financing?
c. Of the six companies, which business relies most heavily on equity financing?
d. Which two companies indicate the greatest risk?
e. Which two companies earn the highest return on assets?
f. Which one company would investors likely prefer based on the risk€“returnrelation?

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Managerial Accounting

ISBN: 978-0073379586

2010 Edition

Authors: John J. Wild, Ken W. Shaw

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