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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


1

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 ago
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