In 2012, C Co's Total Liabilities Were $10,742 Million and Shareholders

question 116

Multiple Choice

In 2012, C Co's total liabilities were $10,742 million and shareholders' equity was $8,403 million. In 2012, P Co's total liabilities were $16,259 million and their shareholders' equity was $6,401 million. Which of the following statements is false?

• A) C Co's debt to equity ratio was 1.28 and P Co's was 2.54.
• B) C Co has only about 56.1% of its assets financed by debt while P Co has about 71.8% of assets financed by debt.
• C) C Co is more profitable than P Co.
• D) P Co is a much higher leveraged company providing greater financial risk for investors but potential higher return on owners' investment to its shareholders.

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