Exercise: Debt Ratio, Debt-to-Equity Ratio
Busch Company's balance sheet shows total liabilities of $510,900, total equity of $126,000, and total assets of $636,900.
Required:
Note: Round answers to two decimal places.
1. Calculate the debt ratio.
2. Calculate the debt-to-equity ratio.
3. CONCEPTUAL CONNECTION Based on the ratios calculated in Requirements 1 and 2, comment on the riskiness of Busch's financing decisions.
Use the following information for Exercises 16-37 through 16-39:
Juroe Company provided the following income statement for last year:
|
Sales
|
$11,300,000
|
|
Cost of goods sold
|
3,000,000
|
|
Gross margin
|
$ 8,300,000
|
|
Operating expenses
|
3,800,000
|
|
Operating income
|
$ 4,500,000
|
|
Interest expense
|
1,000,000
|
|
Income before taxes
|
$ 3,500,000
|
|
Income taxes
|
1,400,000
|
|
Net income
|
$ 2,100,000
|
Juroe's balance sheet as of December 31 last year showed total liabilities of $10,250,000, total equity of $6,150,000, and total assets of $16,400,000.