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gnment/takeAssignmentMain.do?invokers assignments&takeAssignmentSessionl; ocatoreassignment-takeBing O-C Tulsa Con eBook calculator Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities Recent balance sheet information for two companies in the food industry, Santa Fe Company and Madrid Company Santa Fe Madrid Net property, plant, and equipment Current liabilities Long-term debt Other long-term liabilities $356,370 $529,650 99,328 362,167 376,734 423,720 132,366 164,780 164,440 231,870 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place. Santa Fe ) Madrid b. Determine the ratio of fixed assets to long-term liabilities for both companies. Round to one decimal place. Santa Fe Madrid c. Although Madriduses more debt, it has slightly stronger creditor protection and borrowing capacit Feedback Check My work a Divide total liabilites by total stockholders' equity. Total liabilities includes current labilities, long-term debt and other long-h b. Divide net property, plant and equipment by long-term liabilities c. Consider the relationship of the accounts involved Learning Objective 4.Explanation / Answer
A. Determine ratio of liablities to stockholders equity for Both Companies.
1. Santa Fe
Total Liablities = Current Liablities + Long Term Debts+ Other Long Term Liablities
=$ 99,328 + $ 376,734 + $ 132,366
= $ 608,428
Stock Holders Equity (Given) = $ 164,440
So, ration of liablities to stockholders equity= Total Liablities / Stock holders Equity
= $ 608,428 / $ 164,440
= 3.7 Times
2. Madrid
Total Liablities = Current Liablities + Long Term Debts+ Other Long Term Liablities
=$ 362,167 + $ 423,720 + $ 164,780
= $ 950,667
Stock Holders Equity (Given) = $ 231,870
So, ration of liablities to stockholders equity= Total Liablities / Stock holders Equity
= $ 950,667 / $ 231,870
= 4.1 Times
B. Determine ratio of Fixed Assets to Long Term Liablities for Both Companies.
(Note: Long Term Liablities only include Loang term Debt and other loag term Liablities. Current Liablities is not an Long term liablities because it is payble by company for day to day buiness of company and not the long run payment.)
1. Santa Fe
Total Long TermLiablities = Long Term Debts+ Other Long Term Liablities
=$ 376,734 + $ 132,366
= $ 509,100
Fixed Assets (Given) = $ 356,370
So, ration of Fixed Assets to Long Term liablities = Fixed Assets / Total Long Term Liablities
= $ 356,370 / $ 509,100
= 0.7 Times
2. Madrid
Total Long TermLiablities = Long Term Debts+ Other Long Term Liablities
=$ 423,720 + $ 164,780
= $ 588,500
Fixed Assets (Given) = $ 529,650
So, ration of Fixed Assets to Long Term liablities = Fixed Assets / Total Long Term Liablities
= $ 529,650 / $ 588,500
= 0.9 Times
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