Question
Mr. Joseph has identified five different companies in which he is interested in investing, however, he has concerns over the economy and wants to invest
Mr. Joseph has identified five different companies in which he is interested in investing, however, he has concerns over the economy and wants to invest in companies with the lowest debt exposure. (These are the same companies analyzed in the discussion forum.) Mr. Joseph would like you to do additional analysis. The following is a list of data for the investments. Based on this data:
Calculate the debt-to-equity ratio and rank the investments base on least risky to most risky.
Explain the logic of your analysis.
| Company | Total Assets
|
Total Liabilities
|
Net Income
|
A
|
$9,000,000
|
$2,000,000
|
$200,000
|
B
|
15,000,000
|
4,000,000
|
1,000,000
|
C
|
8,000,000
|
4,000,000
|
250,000
|
D
|
18,000,000
|
6,000,000
|
1,600,000
|
E
|
28,000,000
|
22,000,000
|
4,000,000 |
Step by Step Solution
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Step: 1
The debttoequity ratio is calculated by dividing total liabilities by total equity A lower debttoequ...
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Introduction To Management Science A Modeling And Cases Studies Approach With Spreadsheets
Authors: Frederick S. Hillier, Mark S. Hillier
5th Edition
978-0077825560, 78024064, 9780077498948, 007782556X, 77498941, 978-0078024061
