Ratio of liabilities to stockholders’ equity Obj. 6 The following data were taken from Alvarado Company’s balance sheet:

Dec. 31, 20Y4 Dec. 31, 20Y3 Total liabilities $4,085,000 $2,880,000 Total stockholders’ equity 4,300,000 3,600,000

a. Compute the ratio of liabilities to stockholders’ equity for each year.

b. Has the creditor’s risk increased or decreased from December 31, 20Y3, to December 31, 20Y4?

AppendixLO1