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The following information was drawn from the balance sheets of two companies: Company Assets = Liabilities + Equity East 203,000 77,000 126,000 West 608,000 178,000
The following information was drawn from the balance sheets of two companies:
| Company | Assets | = | Liabilities | + | Equity | ||||||
| East | 203,000 | 77,000 | 126,000 | ||||||||
| West | 608,000 | 178,000 | 430,000 | ||||||||
Required a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies. b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.
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