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Compare the two ratios computed in requirement

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Question - The following information was drawn from the balance sheets of two companies.

Company

Assets

=

Liabilities

+

Equity

East

196,000

 

83,000

 

113,000

West

609,000

 

173,000

 

436,000

Required -

a. Compute the debt-to-assets ratio to measure the level of financial risk of both companies.

b. Compare the two ratios computed in requirement a to identify which company has the higher level of financial risk.

Reference no: EM133116753

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