owv2 | Online teaching and lea... Cengage Learning Cengage Digital Learning Homepage - Principles of Accounting eBook Calculator Papa Johns and Yum! Brands: Ratio of liabilities to stockholders' equity The following total liabilities and stockholders' equity information (in millions) is provided for Papa John's International, Inc. and Yum! Brands, Inc. at the end of a recent year: Papa John's Yum! Brands Total liabilities $405 $6,732 Total stockholders' equity 99 1,604 Yum! Brands is a much larger company than is Papa John's, however both companies compete internationally in the fast food business. Papa John's is primarily in the carry-out and delivery pizza business, while Yum! Brands is in the quick-service restaurant business with its Pizza Hut, Taco Bell, and KFC brands. a. Compute the ratio of liabilities to stockholders' equity for each company. (Round to one decimal place.) Liabilities to stockholders' equity ratio Papa John's Yum! Brands b. If the ratio of liabilities to stockholders' equity is 3, what does this mean? 1. It means the total liability is 3 times as great as the stockholders equity. 2. It means the total liability is at least 3 times as great as the number of stocks. 3. It means the stockholders equity is 3 times as great as the total liability 4. It means the total liability is 2 times as great as the stockholders equity. c. Which company is more risky to creditors? The ratio of liabilities to stockholders' equity is Therefore, risky to creditors. Check My Work 3 more Check My Work uses remaining.