The balance sheets of two competing companies in the same industry are provided below. The companies have approximately the same volume of sales and similar operating capacities. Instructions
a) Calculate the debt to total assets ratio for both companies. Which company is more solvent?
b) Based on the information provided, can horizontal analysis be used to determine which company is more profitable?

Question

The balance sheets of two competing companies in the same industry are provided below. The companies have approximately the same volume of sales and similar operating capacities.  Instructions 
a) Calculate the debt to total assets ratio for both companies. Which company is more solvent?
b) Based on the information provided, can horizontal analysis be used to determine which company is more profitable?

Quizplus · Accepted Answer

The Answer of The balance sheets of two competing companies in the same industry are provided below. The companies have approximately the same volume of sales and similar operating capacities.  Instructions 
a) Calculate the debt to total assets ratio for both companies. Which company is more solvent?
b) Based on the information provided, can horizontal analysis be used to determine which company is more profitable?

The Balance Sheets of Two Competing Companies in the Same