At the end of the current year, the following information is available for both Kumar Company and Asher Company.
| Kumar Company | Asher Company |
Total assets | $2,254,500 | $1,123,500 |
Total liabilities | 904,500 | 598,500 |
Total equity | 1,350,000 | 525,000 |
Required
1. Compute the debt-to-equity ratios for both companies.
2. Comment on your results and discuss the riskiness of each company’s financing structure.
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