Compute the debt ratio for Company Corp for both years. Next look at the accounts in both statements that started as zeros or became zeros. What is this company doingwhat strategy did its management implement during 2020?

The debt ratio for the company in 2019 was 0.065

The debt ratio for the company in 2020 was 0.35

From the balance sheet I was given, both short and long term investments fell to 0 during the 2020 fiscal year. The company in 2019 had 0 outstanding bankloans in 2019, but they did in 2020.

Longterm investments went from 6,000 in 2019 to 0 in 2020

Shortterm investments went from 1,100 in 2019 to 0 in 2020

Bankloans went from 0 in 2019 to 3,000 in 2020.

My answer was that the company sold its short and longterm investments and took out a loan in order to have finances to work with. Their strategy for 2020 was to take the finances and invest into expanding the business. They had a very low debt ratio, so this would have been a very safe move.

Looking to check my work