Question

please help with leverage​ ratio, and​ times-interest-earned ratio. Use​ year-end figures in place of averages where needed for calculating the ratios in this exercise. Based on your computed ratio​ values, which company looks the least​ risky?

Companies that operate in different industries may have very different financial ratio values. These differences may grow even wider when we compare companies located in different countries. Review the following financial statements. (Click the icon to view the financial statements.) Read the requirement. Begin by computing the ratios. Start by selecting the formula for the current ratio. Then calculate the current ratios for Accord, Miller, and Raffler. (Enter amounts in millions or billions as provided to you in the problem statement. Round the ratios to two decima places.) / Total current liabilities Accord 197 Total current assets 429 5,701 154,800 Current ratio 2.18 2.56 Miller 2,227 72,000 Raffler 2.15 Next, select the formula for the debt ratio. Then calculate the debt ratios for Accord, Miller, and Raffler. (Enter amounts in millions or billions as provided to you in the problem statement. Round the ratios to two decimal places.) Total liabilities = Total assets 520 Accord 334 Debt ratio 0.64 0.80 0.89 Miller 4,564 5,705 Raffler 183.237 205,884 Next, select the formula for the leverage ratio. Then calculate the leverage ratios for Company Accord, Miller, and Raffler. (Enter amounts in millions or billions as provided to you in the problem statement. Round the ratios to two decimal places.) Average total assets 1 Average common stockholders' equity = Leverage ratio © X - Data Table Accord (Amounts in millions or billions) Accord Miller Raffler Requirement Income data $ 9,736 ¥7,324 298 1. Compare three fictitious companies (Accord, Miller, and Raffler) by calculating the following ratios: current ratio, debt ratio, leverage ratio, and times-interest-earned ratio. Use year-end figures in place of averages where needed for calculating the ratios in this exercise. Based on your computed ratio values, which company looks the least risky? €136,366 5,716 687 438 Total revenues Operating income Interest expense Net income Asset and liability data (Amounts in millions or billions) Total current assets Long-term assets Total current liabilities Long-term liabilities Common stockholders' equity 5,701 Print Done 2,227 2,337 1,141 154,800 51,084 72,000 111,237 22,647 Enter any number in the edit fields and then click Check Answer. Print Done 7 parts remaining Clear All

Answer 1

Answer with working is given below

Leverage Ratio Average Total Assets $520 Accord Miller Raffler Average common = Leverage ratio stockholders' equity $186 = 2.80 $1,141 = 5.00 $22,647 = 9.09 $5,705 $205,884 $154,800 Working notes Current Asset Long-term asset Total Assets $429 $91 $520 $5,701 $4 $5,705 $51,084 $205,884 Interest expense Times interest earned ratio Operating Income Accord Miller $233 Raffler $5,716 $298 $43 $32 $687 Times Interest Earned 6.93 7.28 8.32 Conclusion: Accord Company looks less risky due to lower leverage ratio