Exercise 16-36 Debt Ratio, Debt-to-Equity Ratio

Busch Companys balance sheet shows total liabilities of $510,900, total equity of $126,000, and total assets of $636,900.

Required:

Note: Round answers to two decimal places.

1.Calculate the debt ratio.

2.Calculate the debt-to-equity ratio.

3.CONCEPTUAL CONNECTION Based on the ratios calculated in Requirements 1 and 2, comment on the riskiness of Buschs financing decisions.

Use the following information for Exercises 16-37 through 16-39:

Juroe Company provided the following income statement for last year:

Sales	$11,300,000
Cost of goods sold	3,000,000
Gross margin	$ 8,300,000
Operating expenses	3,800,000
Operating income	$ 4,500,000
Interest expense	1,000,000
Income before taxes	$ 3,500,000
Income taxes	1,400,000
Net income	$ 2,100,000

Juroes balance sheet as of December 31 last year showed total liabilities of $10,250,000, total equity of $6,150,000, and total assets of $16,400,000.

OBJECTIVE 4