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Compute the debt-to-equity ratios for both companies

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At the end of the current year, the following information is available for both West Elm Company and East Park Company.

                                                   West Elm Company             East Park Company

Total assets . . . . . . . . . . $396,396                                $1,650,000

Total liabilities . . . . . . . . 178,596                               1,237,500

Total equity . . . . . . . . . . 217,800                                   412,500

Required

Problem 1. Compute the debt-to-equity ratios for both companies.

Problem 2. Comment on your results and discuss what they imply about the relative riskiness of these companies.

Reference no: EM132703294

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