Jenson Company and Marshall Company operate in the same industry. At the end of 2000 , selected

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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)?

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Survey Of Accounting

ISBN: 9780538846172

1st Edition

Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen

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