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6)20215PX CengageNcwane X https://2
6)20215PX CengageNcwane X https://2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invokers &takeAssignmentSessionLocator-Binpro * a 3 Ch 1 HW eBook Show Me How Putem 10 Ratio of liabit to Owner's Equity 11 12 1 13 The following data were taken from Medlean Company's balance sheet: Der 31, 2016 Dec 31, 2015 Total liabilities $4,042.000 $3.096,000 Total owner's equity 4,300,000 3,600,000 a. Compute the ratio of liabilities to owner's quity. Round your answers to two decimals. Ratio of Liabilities to Owner's Equity Dec 31, 2016 14. 15 Dec 31, 2015 16 b. Has the creditor risk Increased or decreased from December 31, 2015, 16 December 31, 20467
Expert Solution
Answer:
a.)
| Ratio of liabilities to owner's equity | |
| Dec. 31, 20Y6 [4,042,000 / 4,300,000] | 0.94 |
| Dec. 31, 20Y5 [3,096,000 / 3,600,000] | 0.86 |
b.) Increased
Explanantion : As the ratio of liabilities to owner's equity has increased from December 31, 20Y5 to December 31, 20Y6, the creditor's risk has increased.
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