Company A has liabilities of $6,773,000 and stockholders' equity of $3,647,000 at the end of the current year,and sales revenue of $9,800,000 and net income of $899,080 for the year.Company B has assets of $1,680,000 and stockholders' equity of $978,750 at the end of the current year,and sales revenue of $1,950,000 and net income of $351,000 for the year.
Required:
Part a.Calculate the debt-to-assets ratio for each company.
Part b.Identify the company that has greater financing risk and explain why.

Question

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The Answer of Company A has liabilities of $6,773,000 and stockholders' equity of $3,647,000 at the end of the current year,and sales revenue of $9,800,000 and net income of $899,080 for the year.Company B has assets of $1,680,000 and stockholders' equity of $978,750 at the end of the current year,and sales revenue of $1,950,000 and net income of $351,000 for the year.
Required:
Part a.Calculate the debt-to-assets ratio for each company.
Part b.Identify the company that has greater financing risk and explain why.

Company a Has Liabilities of $6,773,000 and Stockholders' Equity of $3,647,000