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In: Accounting
Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities Recent balance...
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, is as follows (in thousands):
| Santa Fe | Madrid | |||
| Net property, plant, and equipment | $634,720 | $816,800 | ||
| Current liabilities | 257,307 | 599,208 | ||
| Long-term debt | 587,116 | 588,096 | ||
| Other long-term liabilities | 206,284 | 228,704 | ||
| Stockholders' equity | 256,270 | 321,820 | ||
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 |
Solutions
Expert Solution
a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place.
|
Santa Fe |
4.1 |
|
Madrid |
4.4 |
Working notes for the answer:
|
Santa Fe |
Madrid |
|
|
Current liabilities (A) |
257307 |
599208 |
|
Long-term debt (B) |
587116 |
588096 |
|
Other long-term liabilities © |
206284 |
228704 |
|
Total Liability (D=A+b+c) |
1050707 |
1416008 |
|
Divided By |
||
|
Stockholders' equity |
256,270 |
321,820 |
|
ratio of liabilities to stockholders' equity |
4.1 |
4.4 |
__________________________________
2
ratio of fixed assets to long-term liabilities for both companies.
|
Santa Fe |
0.8 |
|
Madrid |
|
Working notes for the answer:
|
Santa Fe |
Madrid |
|
|
Long-term debt |
587,116 |
588,096 |
|
Other long-term liabilities |
206,284 |
228,704 |
|
Total Long term liabelity (A) |
793,400 |
816,800 |
|
Net property, plant, and equipment(B) |
$634,720 |
$816,800 |
|
fixed assets to long-term liabilities (B/A) |
0.8 |
1 |
ekkarill92 answered 2 years agoRelated Solutions
Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities Recent balance...
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, is as follows (in
thousands):
Santa Fe
Madrid
Net property, plant, and equipment
$743,280
$574,700
Current liabilities
331,320
466,878
Long-term debt
687,534
413,784
Other long-term liabilities
241,566
160,916
Stockholders' equity
300,100
226,430
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900,000
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