Below are selected data from the financial statements of Pepper Company for 2016 and 2017. 2017...
Below are selected data from the financial statements of Pepper Company for 2016 and 2017.
|
2017 |
2016 |
|
|
Total liabilities |
$240,000 |
$190,000 |
|
Common stock ($30 par) |
31,000 |
31,800 |
|
Paid-in capital in excess of par—common stock |
55,500 |
58,250 |
|
Retained earnings |
93,000 |
107,000 |
The debt-to-equity ratio for 2017 is
Select one:
A. $1.337 to $1, which should be a cause of concern for Pepper Company managers.
B. $1.337 to $1, which should be a cause of concern for stockholders.
C. increasing, which should be a negative sign for credit analysts.
D. All of the above
Homework Answers
Correct answer is D. All of the above .
explanation -
Debt- equity ratio = Total liabilities/Equity
| 2017 | 2016 | ||
| a | Total liabilities | $240,000 | $190,000 |
| Common stock ($30 par) | 31,000 | 31,800 | |
| Paid-in capital in excess of par—common stock | 55,500 | 58,250 | |
| Retained earnings | 93,000 | 107,000 | |
| b | total equity | $179,500 | $197,050 |
| c=a/b | Debt-equity | $1.337 | $0.964 |
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Assets
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2016
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Accounts receivable
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