Reference no: EM131821279
Exercise: Debt Ratio, Debt-to-Equity Ratio
Busch Company's balance sheet shows total liabilities of $510,900, total equity of $126,000, and total assets of $636,900.
Required:
Note: Round answers to two decimal places.
1. Calculate the debt ratio.
2. Calculate the debt-to-equity ratio.
3. CONCEPTUAL CONNECTION Based on the ratios calculated in Requirements 1 and 2, comment on the riskiness of Busch's financing decisions.
Use the following information for Exercises 16-37 through 16-39:
Juroe Company provided the following income statement for last year:
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Sales
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$11,300,000
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Cost of goods sold
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3,000,000
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Gross margin
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$ 8,300,000
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Operating expenses
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3,800,000
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Operating income
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$ 4,500,000
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Interest expense
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1,000,000
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Income before taxes
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$ 3,500,000
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Income taxes
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1,400,000
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Net income
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$ 2,100,000
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Juroe's balance sheet as of December 31 last year showed total liabilities of $10,250,000, total equity of $6,150,000, and total assets of $16,400,000.
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Calculate the debt-to-equity ratio
: Busch Company's balance sheet shows total liabilities of $510,900, total equity of $126,000, and total assets of $636,900. Calculate the debt-to-equity ratio.
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