QUESTION 37

36. You are evaluating the solvency and liquidity of XYZ Co. in light of the following information: Total Debt Total Equity Your MOST LIKELY conclusion is that: FY 2017 $2000 $4000 FY 2016 $1900 $4500 FY 2015 $1750 $5000 a. The company is becoming less solvent b. The company is becoming less liquid c. The company is becoming more solvent d. The company is becoming more liquid 37. Using the same information as for Question #36, what is the MOST REASONABLY PROBABLE explanation for the financial data? The decrease in equity is the result of the decline in the market value of the company's stock. The decrease in equity may be the result of recurring losses, payment of dividends greater than net income or repurchase of shares. The increase in total debt may mean the company has a higher credit rating in FY 2017 than in FY 2015. a. b. c