Westmoreland Company
Following Are Selected Data from Westmoreland Company's Financial

question 38

Multiple Choice

Westmoreland Company
Following are selected data from Westmoreland Company's financial statements.
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$\begin{array}{lrr}&2018&2017\\\text { Current liabilities } & \$ 230,000 & \$ 160,000 \\\text { Long-term debt } & 120,000 & 320,000 \\\text { Stockhol ders' equity } & 420,000 & 540,000 \\\text { Cash payments for additions to plant and equipment } & 45,000 & 32,000 \\\text { Net cash flow from operating activities } & 80,000 & 51,000 \\\text { Interest and principal payments } & 12,000 & 8,000 \\\text { Net operating cash flows before interest and taxes } & 68,000 & 43,000 \\\text { Net income } & 90,000 & 72,000 \\\text { Interest expense } & 8,500 & 11,500 \\\text { Income taxes } & 16,000 & 14,500 \\\text { Dividends paid } & 15,000 & 30,000\end{array}$ ​
-Refer to the Westmoreland Company data.
The company's debt-to-equity ratio was 0.83 to 1 in 2018 and 0.89 to 1 in 2017.Which of the following statements is true concerning Westmoreland?

• A)The company has a smaller percentage of capital from owners at the end of 2018 than at the end of 2017.
• B)The company relied more on creditors for financing during 2018 than in 2017.
• C)The company is improving its debt-to-equity ratio.
• D)The company appears to be in a weaker position at the end of 2018 to finance capital expenditures from cash flow generated by operating activities.

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