Identify a matching firm in your firm's industry with similar size as your firm (use 2016...

Identify a matching firm in your firm's industry with similar size as your firm (use 2016 total assets to choose a matching firm). Compare your firm's long term debt/total assets and long term debt/equity ratio with your matching firm

	My firm (long-term debt to total assets ratio)	Matching firm (long-term debt to total assets ratio)
2015	0.0037	0.0439
2016	0.0010	0.0198
2017	0.0050	0.0000
2018	0.0103	0.0000
2019	0.2422	0.0000
Average	0.05244	0.012746

	My firm (long-term debt to Equity ratio)	Matching firm (long-term debt to Equity ratio)
2015	0.0055	0.0717
2016	0.0019	0.0314
2017	0.0212	0.0000
2018	0.1145	0.0000
2019	-1.5283	0.0000
Average	-0.2770	0.0206

Solutions

Expert Solution

If we compare My firms and matching firms (L-T debt to total asset ratio, we can see that, the firm selected by me , My firm has shown steady incere in the debt to total assets from 2018 onwards. Net debt to total assets is a leverage ratio that determines the gross debt to a company's own assets. Using this method, investors will equate the profitability of one business with that of other firms in the same industry. This data may represent a company's financial stability.

If we look at LT debt to equity ratio , we find

Lt debt to equity sharply fell in 2019 for 'My firm"

if we look in 2016 total assets to choose a matching firm

So the chosen my firm has lower D to E and D to Total Asset ratio denoting it is a company with a lower financial leverage which indicates that, even if the company does have debt, its operations and sales are generating enough revenue to grow its assets through profits.

Thanks

jeff jeffy answered 1 year ago

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