Question

1. Compare three leading companies​ (Company Upper D​, Company Upper M​, and Company Upper T​) by calculating the following​ ratios: current​ ratio, debt​ ratio, leverage​ ratio, and​ times-interest-earned ratio. Use​ year-end figures in place of averages where needed for the purpose of calculating ratios in this exercise. Based on your computed ratio​ values, which company looks the least​ risky?

(Amounts in millions or billions) Company D Company M Company T Income data

(Amounts in millions or billions)	Company D	Company M	Company T
Income data
Total revenues	$9,731	¥ 7,305	€ 136,392
Operating income	292	222	5,592
Interest expense	43	32	687
Net income	22	14	441
Asset and liability data
(Amounts in millions or billions)
Total current assets	433	5,949	167,706
Long-term assets	117	943	63,923
Total current liabilities	187	2,187	72,600
Long-term liabilities	87	2,293	110,387
Stockholders' equity	276	2,412	48,642

Begin by computing the ratios. Start by selecting the formula for the current ratio. Then calculate the current ratios for Company

Upper DD​,

Upper MM​,

and

Upper TT.

​(Enter amounts in millions or billions as provided to you in the problem​statement, X. Round the ratios to two decimal​ places.)

Answer 1

Answer:

Current ratios:

Debt ratio:

Leverage ratio:

Times-interest-earned ratio:

Based on computed ratio​ values, company D looks least​ risky. Company D has lowest debt ratio, lowest leverage ratio and acceptable times interest earned and current ratios.