The Balance Sheets and Income Statements for Two Competing Companies

question 137

Essay

The balance sheets and income statements for two competing companies in the same industry are presented below: Instructions
a) Calculate both companies' debt to total assets ratio.
b) Calculate both companies' interest coverage ratio.
c) Comment on the two companies' solvency in comparison to each other.
d) One of the companies is a public company, and the other is a private company. Identify which of the two companies appears to be the public company and explain your conclusion. Describe how that affects the extent to which it is financed by debt in comparison to the other company.

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Definitions:

Skill-Based Pay

A system of pay that rewards employees for the acquisition and the development of new skills that lead to enhanced work performance.

Extrinsic Rewards

Rewards that come from an external source, such as money, trophies, or praise, which are given to someone for performing a particular task.

Self-Praise

The act of expressing commendation, pride, or approval of oneself, often perceived negatively when excessive.

Paid Vacations

Employer-provided benefits allowing employees time off work with pay.