v2.cengagenow.com ACCT1100 Fina.. CengageNOWv2 I Onlin... Cengage Customer s Bla

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v2.cengagenow.com ACCT1100 Fina.. CengageNOWv2 I Onlin... Cengage Customer s Blackboard - Atlanta Tech Lessons-ACCT1100-Fina Ch 1 Homework 1-Week 1 Ratio of Liabilities to Owner's Equity The folowing data were taken from Mesa Company's balance sheet: Dec. 31, 2016 $547,800 415,000 Dec. 31, 2015 $518,000 370,000 Total liabilities Total owner's equity a. Compute the ratio of liabilities to owner's equity. Round your answers to two decimal places. Ratio of Liabilities to Owner's Equity Dec. 31, 2016 Dec. 31, 2015 b. Has the creditor's risk increased or decreased from December 31, 2015, to December 31, 2016? was Wert

Explanation / Answer

a.) Liabilities to owner's equity = Total liabilities / Total owner's equity

Dec.31,2016 Dec.31, 2015

Liabilities to owner's equity 547800 / 415000 518000 / 370000   

=1.32 =1.4

b.) Decreased , lower debt to equity ratio from 2015 to 2016 shows low risk from creditor's side

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