Question

E1-31B: commute the missing amount in the accounting equation for each company (Amount in billions): Assets...

E1-31B:

commute the missing amount in the accounting equation for each company (Amount in billions):

Assets Liabilities Stockholders Equity
Corner Grocery $? $51 $37
Sixth Street Bank 21 ? 20
Valerie's Gifts 29 13 ?

Which company appears to have the strongest financial position? Explain your reasoning.

Business   Accounting   
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Answer #1

Corner Grocery:

Assets = Liabilities + Stockholders Equity

Assets = $51 + $37 = $88

Sixth Street Bank:

Liabilities = Assets - Stockholders Equity

Liabilities = $21 - $20 = $1

Valerie's Gifts:

Stockholders Equity = Assets - Liabilities

Stockholders Equity = $29 - $13

Stockholders Equity = $16

Sixth Street Bank appears to have the strongest financial position because its liabilities make the the smallest percentage of company assets. This percentage is 4.76%.

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