Given the Following Data A Compute the Ratio of Liabilities to Stockholders' Equity for Dec

question 122

Essay

Given the following data:
$\begin{array}{lcl}&\text { Dec. } 31,2014&\text { Dec. } 31,2013\\\text { Total liabilities } & \$ 128,250 & \$ 120,000 \\\text { Total stockholders' equity } & 95,000 & 80,000\end{array}$

a. Compute the ratio of liabilities to stockholders' equity for each year.
b. Has the creditors' risk increased or decreased from December 31, 2013, to December 31, 2014?

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Definitions:

First-Mover Advantages

Competitive benefits that accrue to the initial entrant into a market, including brand recognition and product loyalty before competitors enter.

Zero-sum Game

A situation in which one party's gain is exactly balanced by another party's loss, so the net change in wealth or benefit is zero.

Gains

Refers to increases in wealth, income, or resources, often resulting from investment or business operations.

Losses

The negative financial result from an entity's operations, when the total costs exceed total revenues.