Question

what does mean when a companys total revenue decreases, total liabilities increase and total equity decreases...

what does mean when a companys total revenue decreases, total liabilities increase and total equity decreases over a period 2015-2019 ?

Homework Answers

Answer #1

When a companys total revenue decreases, the profits decrease which means it has less retained earnings for investments between the periods 2015 to 2019. This means the company will have to use debt funding to finance investments during this period proportion to equity as equity is costly to raise. Thus liabilities increase and equity decrease due to increasing funding from the reserves and debt. So lesser retained earnings, increased debt and larger use of reserve funding had increased liabilities and decreased total equity. Total equity can decrease also because of buy back of shares by the company using debt funding.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Below is the Liabilities and Shareholder Equity section for Nike for a consecutive five-year period. NIKE...
Below is the Liabilities and Shareholder Equity section for Nike for a consecutive five-year period. NIKE (NKE) 2019 2018 2017 2016        2015 Current Liabilities Accounts Payable                    9.6% 9.7% 8.5% 7.8% 7.4% Short Term Debt 0.9%      1.9% 4.2% 7.5% 14.8% Other Current Liabilities 12.3% 13.8% 17.3% 13.2% 8.5% Total Current Liabilities 22.7% 25.5% 30.0% 28.5% 30.7% Non-Current liabilities Long Term Debt                       7.8% 8.6% 8.2% 9.7% 7.5% Deferred Income Taxes 5.3% 5.3% 2.3% 2.2% 1.8% Total Non-Curr Liab 13.1%...
1. If Total Liabilities are $3,900 and Total Equity is $2,800 then what is the value...
1. If Total Liabilities are $3,900 and Total Equity is $2,800 then what is the value of Total Assets?? 2. Evaluate each of the following transactions in terms of their effect on assets, liabilities, and equity. 1. Purchase equipment for $50,000 in cash 2. Borrow $67,000 from a bank What is the net change in Total Liabilities?
If Total Assets are $3,500 and Total Liabilities is $2,500 then what is the value of...
If Total Assets are $3,500 and Total Liabilities is $2,500 then what is the value of Total Equity? Use the starting balance sheet and the list of changes to create an updated balance sheet and to answer the question. Ruston Company Balance Sheet As of December 31, 2019 (amounts in thousands) Cash 2,100 Liabilities 2,500 Other Assets 3,100 Equity 2,700 Total Assets 5,200 Total Liabilities & Equity 5,200 Between January 1 and March 31, 2020: 1. Other Assets decrease by...
when demand is inelastic, an increase in price will lead to an increase in total revenue...
when demand is inelastic, an increase in price will lead to an increase in total revenue for the product. -True -Flase
How is total revenue increased when demand is elastic? If an increase in price causes an...
How is total revenue increased when demand is elastic? If an increase in price causes an increase in total revenue, demand is said to be inelastic and if an increase in price causes a decrease in total revenue, then demand is said to be elastic… There’s no way for total revenue to increase when demand is elastic, right?
18. What effect does recognizing an accrued liability for utilities at the end of the accounting...
18. What effect does recognizing an accrued liability for utilities at the end of the accounting period have on the accounting equation? a.Liabilities increase and stockholders' equity decreases. b.Assets decrease and liabilities decrease. c.Assets decrease and stockholders' equity decreases. d.Liabilities increase and stockholders' equity increases.
Questions: 1. What do we mean by cost behavior? 2. When activity increases, does the unit...
Questions: 1. What do we mean by cost behavior? 2. When activity increases, does the unit variable cost increase, decrease or remain the same? 3. When activity decreases, does the unit fixed cost increase, decrease or remain the same? 4. When activity decreases, does total variable cost increase, decrease or remain the same? 5. When activity increases, does total fixed cost increase, decrease or remain the same? 6. Define the following: a. Gross margin b. Contribution margin 7. What are...
Briefly explain the rules of debits and credits as they relate to assets, liabilities, equity, revenue,...
Briefly explain the rules of debits and credits as they relate to assets, liabilities, equity, revenue, and expenses. Do debits always increase an account? Do credits always decrease an account? Give examples.
When there is a significant increase in the estimated total contract costs but the increase does...
When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct? A) Under both the percentage-of-completion and the completed-contract methods, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. B) Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the...
Schumacher Corporation had $1,000 in total assets, $800 in total debt (liabilities) and $200 in total...
Schumacher Corporation had $1,000 in total assets, $800 in total debt (liabilities) and $200 in total equity at the end of 2018, and in 2019 it generated 1,500 in sales, $500 in EBIT and $150 in net income. The company did not distribute any 2019 net income. What was Schumacher’s return on equity in 2019 Calculate Schumacher’s change in leverage from 2018 to 2019 and describe the effect on its probability of financial distress
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT