Question

Recent balance sheet information for two companies in the snack food industry, Santa Fe Company and...

Recent balance sheet information for two companies in the snack food industry, Santa Fe Company and Madrid Company, are as follows:

Santa Fe Madrid
Net property, plant, and equipment $298,716 $ 471,870
Liabilities:
Current liabilities 585,938 874,105
Long-term debt 669,848 539,280
Other long-term liabilities 235,352 209,720
Total liabilities $1,491,138 $1,623,105
Stockholders' equity 292,380 295,110
Total liabilities and stockholders' equity $1,783,518 $1,918,215

a. Determine the debt ratio for both companies. Enter your answers as percent values rounded to one decimal place.

Santa Fe ?
Madrid ?

b. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place.

Santa Fe ?
Madrid ?

c. Determine the ratio of fixed assets to long-term liabilities for both companies. Enter your answers as decimal values rounded to two decimal places.

Santa Fe ?
Madrid ?

Homework Answers

Answer #1
a.) Santa Fe Madrid
Debt Ratio 83.6% 84.6%
( Total Liabilities / Total liabilities & Stockholders) =1491138/1783518 =1623105/1918215
b.) Santa Fe Madrid
Ratio of liabilities to stockholders' equity 5.1 5.5
( Total Liabilities / Stockholder's equity ) =1491138/292380 =1623105/295110
c.) Santa Fe Madrid
Ratio of fixed assets to long-term liabilities 0.33 0.63
( Fixed assets / Long term liabilities ) =298716/(669848+235352) =471870/(539280+209720)
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