Question

What observation can you make just by comparing these three numbers 2017 to 2018. **numbers are...

What observation can you make just by comparing these three numbers 2017 to 2018.

**numbers are in millions**

2017
total assets= $25,288.9
total liabilities= $12,257.3
total equity= $13,031.6

2018
total assets= $23,652.6
total liabilities= $11,054.5
total equity= $12,598.1

Homework Answers

Answer #1

Answer: To analyze the given data and draw the conclusion, we need to calculate some critical ratio which helps us in analyzing the financial condition of the company:

2017 2018
Assets 25288.9 23652.6
Liability 12257.3 11054.5
Equity 13031.6 12598.1
Total liability to total assets ratio 0.484690912 0.467369338
Total Debt equity ratio = Liability/equity 0.940582891 0.877473587

Total liability to total assets ratio: The ratio has improved and it indicates the increase in capacity of the company to pay its short term and long term obligations, the liabilities have decreased proportionally more with respect to decrease in assets

Total Debt equity ratio: decrease in Debt equity ratio is a healthy sign and it indicates the company is not increasing its debt.

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