Below are selected data from the financial statements of Moriarty Company. 2016
ID: 2458703 • Letter: B
Question
Below are selected data from the financial statements of Moriarty Company.
2016
2015
Total liabilities
$1,205,000
$952,000
Common stock ($30 par)
250,000
225,000
Paidin capital in excess of par—common stock
150,000
135,000
Retained earnings
155,000
145,000
The debt-to-equity ratio for 2016 is:
increasing, which should be a major cause of concern for Moriarty Company.
increasing, which should be a good sign in investors' eyes.
decreasing, which should be a major cause of concern for Moriarty Company.
decreasing, which should be a good sign in investors' eyes.
2016
2015
Total liabilities
$1,205,000
$952,000
Common stock ($30 par)
250,000
225,000
Paidin capital in excess of par—common stock
150,000
135,000
Retained earnings
155,000
145,000
Explanation / Answer
Answer: A. increasing, which should be a major cause of concern for Moriarty Company.
Debt to equity ratio=Debt/shareholder's equity
2016=$1205000/$555000=2.17
2015=$952000/$505000=1.89
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