Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Treat that amount as if it is a capital lease obligation, which means that your total assets and total long-term liabilities will increase by that

Treat that amount as if it is a capital lease obligation, which means that your total assets and total long-term liabilities will increase by that amount.

$158 is the capital lease obligation.

Long-term debt/ Total equity = 2,314 / 1,533 = 1.5 . Long term debt to equity ratio

Total Liabilities/ Stockholders equity 6,305/ 1,525= 4.13 Total debt to equity ratio

Now you recalculate the total debt to equity ratio and the long-term debt to equity ratio based on the newly calculated long-term and hence total liabilities.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting An International Introduction

Authors: David Alexander, Prof Christopher Nobes, Chris W. Nobes

4th Edition

027372164X, 978-0273721642

More Books

Students also viewed these Accounting questions

Question

Where did the faculty member get his/her education? What field?

Answered: 1 week ago