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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