Use the balance sheets from Suzannes Hotels in E10- 19A to compute the debt- to- equity ratio for 2011 and 2010. Suppose you calculated a

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?

In E10-19A

Suzanne's Hotels, Inc. Balance Sheets December 31, 2011 December 31, 2010 Current assets: Cash $98,000 90,000 116,000 160,000 382,000 160,000 42.000 Total current liabilities $206,000 $223,000 117,000 340,000 90,000 Total liablities Common s Retained earnings Total liabilties and stockholders' equity.. ....325,000 90,000 165,000 $580,000 stoc rS