Long-Term Solvency Analysis The following information was taken from Station Company's balance sheet: Fixed assets (net) $940,500 Long-term liabilities 209,000 Total liabilities 658,350 Total stockholders' equity 731,500 Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity. If required, round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities b. Ratio of liabilities to stockholders' equity

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Business

Emery Maldonado

27 October, 05:54

Long-Term Solvency Analysis The following information was taken from Station Company's balance sheet: Fixed assets (net) $940,500 Long-term liabilities 209,000 Total liabilities 658,350 Total stockholders' equity 731,500 Determine the company's (a) ratio of fixed assets to long-term liabilities and (b) ratio of liabilities to stockholders' equity. If required, round your answers to one decimal place. a. Ratio of fixed assets to long-term liabilities b. Ratio of liabilities to stockholders' equity

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Answers (1)

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Roderick Thornton · Answer 1

a. Fixed Assets to long liability ratio is 4.5 times

b. Liabilities to stockholders equity is 0.9 times

Explanation:

(a)

Fixed Assets to long liability determines that how much the fixed asset of the company is as compared to long term liabilities.

Fixed Assets to long liability = Fixed Asset / Long Term Liabilities

Fixed Assets to long liability = $940,500 / $209,000 = 4.5 times

(b)

Ratio of Liabilities to stockholders equity determines the ratio of all the liabilities of the company as compared to stockholders equity.

Liabilities to stockholders equity = Liabilities / stockholders equity

Liabilities to stockholders equity = 658,350 / 731,500 = 0.9 times