Question

based on the table below, what is the leverage ratio for:

Question 5 ASU Home at a Based on the table below, what is the Leverage ratio for: (Round to 2 decimal places) Twitter Facebook Google Which company is the most risky capital structure: Twitter Facebook, or Google? Twitter Facebook Google $8,787,524,500 $90,929,000,000 $214,043,500,000 $2,861,118,500 $11,692,000,000 $49,978,000,000 Average Assets Average Liabilities Average Stockholders Equity $5,926,406,000 $79,237,000,000 $165,065,500,000

Answer 1

A leverage ratio is any one of several financial measurements that look at how much capital comes in The leverage ratio category is important because companies rely on a mixture of equity and debt to well known financial leverage ratio is the debt-to-equity ratio. It is expressed as: Debt-to-Equity Ratio= Total Liabilities Shareholders Equity Computation of leverage ratio Particulars 1.Average of asstets 2. Average of liabilities 3.Average of stockholders Equity 4.Leverage Ratio (2/3) Twitter Facebook Google $8,78,75,24,500 $90,92,90,00,000 $2,14,04,35,00,000 $2,86,11,18,500 $11,69,20,00,000 $49,97,80,00,000 $5,92,64,06,000 $79,23,70,00,000 $1,65,06,55,00,000 0.48 0.15 0.30 A high debt/equity ratio generally indicates that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If the company's interest expense grows too high, it may increase the company's chances of a default or bankruptcy. Conclusion Twitter has high leverage ratio of 0.48 is the most risky capital structure