Question

S MmyMC X View History Bookmarks People Tab Window Help M Grade X M Cours ACCI X M Grade X M Powe Ne Yankex м тумх М ngagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false ** Show Me How Calculator Ratio of liabilities to stockholders' equity The following data were taken from Alvarado Company's balance sheet: eBook Print item Dec. 31, 2014 Dec 31, 2013 Total liabilities $4,410,000 $2,250,000 Total stockholders' equity 4,900,000 3,000,000 a. Compute the ratio of liabilities to stockholders' equity for each year. Round your answers to 2 decimal places Dec 31, 2014 Dec 31, 2013 0.44 X 0.72 X b. Has the creditor's risk increased or decreased from December 31, 203, to December 31, 2014? Increased Par correct ore Chew MacBook Air

Answer 1

a)

Liabilities to share Holders equity ratio

= Total liabilities/Equity

2014

= ( 4,410,000/4,900,000 ) = 0.9

2013

= ( 2,250,000/3,000,000 ) = 0.75

b)

Creditors risk increased from 2013 to 2014

because in 2013 there was a debt of $ 0.75

for every $ 1 invested by share hoders but where as in 2014 there is debt of $ 0.9 for every $ 1 invested by share hoders.

Thank you plz upvote