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Debt Ratios The Ford Motor Company (F) designs, manufactures, markets, and sells cars, trucks, and...

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Accounting

Debt Ratios

The Ford Motor Company (F) designs, manufactures, markets, and sells cars, trucks, and sport utility vehicles (SUVs). Ford is a major competitor of General Motors Company (GM). The following data (in millions) were adapted from recent financial statements of Ford Motor Company:

Year 2 Year 1
Total assets $258,537 $256,540
Total liabilities 225,352 220,608
Total stockholders' equity 33,185 35,932

1. Compute the debt ratio for Years 1 and 2. Round to one decimal place.

Year 2 Year 1
Debt ratio _____ % _____ %

2. Given your answer to part (1), what is the ratio of stockholders' equity to total assets? Round to one decimal place.

Year 2 Year 1
Ratio of stockholders' equity to total assets ______ % _____ %

3. Are Ford's operations financed primarily with debt or equity?

Debt or Equity

4. Total liabilities have

increased or decreased

as a percent of total assets in Year 2; thus, creditors would feel

less or more safe.

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