Jenson Company and Marshall Company operate in the same industry. At the end of 2000 , selected
Question:
Jenson Company and Marshall Company operate in the same industry. At the end of 2000 , selected information from their financial statements (in millions of dollars) was as follows:
\begin{tabular}{lcc}
\hline & Jenson Company & Marshall Company \\
\hline Long-term debt $\ldots \ldots \ldots \ldots \ldots \ldots \ldots$ & $\$ 22.1$ & $\$ 34.1$ \\
Total liabilities. . . . . . . . . . . . & 35.4 & 57.2 \\
Total stockholders' equity $\ldots \ldots \ldots \ldots$ & 22.4 & 33.3 \\
\hline
\end{tabular}
Required: Based on the above information for Jenson Company and Marshall Company, make the following computations and answer the interpretive question:
1. Compute the debt ratios for the two companies.
2. Compute the debt-equity ratios for the two companies.
3. Interpretive Question: Which company do you think is the stronger (i.e., which would you rather invest in)?
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen