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Financial Statement Analysis

1. When computing the debt ratio, do you think the result would be more useful to financial statement users if the numerator included all liabilities as shown on the balance sheet, all liabilities as shown on the balance sheet plus any contingencies, or only long-term liabilities? Why

2. In assessing the ability of a company to repay the principal on its long-term debt, one of the primary ratios analyzed is the debt ratio. In this situation, would the analyst also be concerned with profitability? Why or why not?

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1. When computing the debt ratio, do you think the result would be more useful to financial statement users if the numerator included all liabilities as shown on the balance sheet, all liabilities as shown on the balance sheet plus any contingencies, or only long-term liabilities? Why

Debt ratios can be used to determine the overall level of financial risk a company and its shareholders face. In general, the greater the amount of debt held by a company the greater the financial risk of bankruptcy. (Investopedia, 2009) Debt ratio indicates the financial solvency of the organization. Higher debt ratio ...

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Response gives guidance about the Financial Statement Analysis

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