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2/23

QS 17-15 Solvency ratios L04 Assignment# 2 (Page #4) The following information relates to three companies that operate simular businesses: Company A Company B Company C Cash..... Accounts receivable, net Inventory Plant and equipment, net.......... Accounts payable..... Notes payable secured by mortgages on plant and equipment. Common shares Retained earnings... $ 30.000 250,000 760,000 640,000 335.000 $ 65,000 654,500 590,000 1,850,000 970,000 $ 5,000 565.000 190,000 985,000 180,000 540,000 700,000 55,000 1,500,000 500,000 189,500 215,000 450,000 900.000 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. 6 of 6 3