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

Dec. 31, 2016 Dec. 31, 2015 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.

b. Has the creditor’s risk increased or decreased from December 31, 2015, to December 31, 2016?