a. Calculate the debt ratio and the return on assets using the year-end information for each of
Question:
b. Of the six companies, which business relies most heavily on creditor financing?
c. Of the six companies, which business relies most heavily on equity financing?
d. Which two companies indicate the greatest risk?
e. Which two companies earn the highest return on assets?
f. Which one company would investors likely prefer based on the riskreturnrelation?
Transcribed Image Text:
Case Assets Liabilities Average AssetsNet Income 90,500 $ Company 3 S Company5 Company 6 Company 1 Company 4 Company 2 64,000 32,500 147,000 92,000 104,500 12,000 $ 47,000 26,500 56,000 31,000 51,500 100,000 S 40,000 50,000 200,000 40,000 70,000 20,000 3,800 660 21,000 7,500 12,000
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a Co Liabilities Assets Debt Ratio Net Income Average Assets ROA 1 56000 147000 038 21000 200000 ...View the full answer
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