The following information relates to three companies that operate similar businesses: For each company, calculate the debt
Question:
The following information relates to three companies that operate similar businesses:
For each company, calculate the debt ratio, equity ratio, and pledged assets to secured liabilities. Identify which company has the least favourable performance in each ratio and why.
Transcribed Image Text:
Company A Company B Company C $ 65,000 $ 5,000 565,000 190,000 Cash. Accounts receivable, net 250,000 654,500 Inventory. Plant and equipment, net. Accounts payable. Notes payable secured by mortgages on plant and equipment.. Common shares. Retained earnings. 760,000 1,850,000 640,000 335,000 985,000 970,000 1,500,000 500,000 189,500 215,000 590,000 700,000 450,000 55,000 900,000
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Company A CompanyB CompanyC Least Favourable Debt ratio 5506 1 7818 4 2264 7 B 10 Equity ratio 4494 ...View the full answer
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Related Book For
Fundamental Accounting Principles Volume II
ISBN: 978-1260305838
16th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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