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Ratio of Liabilities to Owners Equity The following data were taken from Alvarado Companys balance sheet: Dec. 31, 2019 Dec

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Answer #1
a.
Ratio of liabilities to owner's equity
Dec. 31, 2019 [ 4085000 / 4300000 ] 0.95
Dec. 31, 2018 [ 2880000 / 3600000 ] 0.80
b.
Answer : Increased
Explanantion : As the ratio of liabilities to owner's equity has increased from December 31, 2018 to December 31, 2019, the creditor's risk has increased.
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