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What is the ratio of Liabilities to Stockholder's Equity for 2017? Hint: use the accounting equation to determine total stockholder's equity. 131.1% 77% 76% 43%

What is the ratio of Liabilities to Stockholder's Equity for 2017? Hint: use the accounting equation to determine total stockholder's equity.

131.1%

77%

76%

43%

Ignore your answer to the question above, if the ratio of liabilities to stockholders' equity in 2016 was 54%, and in 2017, the ratio was 46%, which of the following statements is true?

More assets were financed with equity vs. debt in 2017.

Less assets were financed with equity vs. debt in 2017.

Investors would look unfavorably on the change in the ratio from 2016 to 2017.

Companies would prefer to finance most of their assets with debt vs. equity.

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ABC Company Partial Balance Sheet December 31, 2017 December 31, 2016 Assets in no particular order): Cash Property, Plant and Equipment Accounts Receivable Inventory Prepaid Rent Long-term Notes Receivable Short-term (temporary) investments 100,000 540,000 120,000 300,000 8,000 150,000 50,000 $120,000 520,000 140,000 260,000 7,500 120,000 60,000 Liabilities in no particular order): Accounts Payable Short-term Notes Payable Wages Payable Long-term Debt Income Tax Payable 120,000 87,700 10,000 300,000 30,000 210,000 10,000 8,500 280,000 25,500 Income Statement For the Year Ended December 31, 2017 $ Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before tax Income tax Net income 1,200,000 700,000 500,000 120,000 60,000 320,000 11,000 309,000 92,700 216,300

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