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Kellogg Company: Compute and analyze debt ratio, debt to equity ratio.

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Balance Sheet and Market Value of Your Company's Liabilities and Equity

Refer to your company's most recent balance sheet (Kellogg Company). Review the 'liabilities and equity side' of the balance sheet.

(a) Find the total of the short term liabilities and long term liabilities.

(b) Find your company's market capitalization.

Once you have this information, prepare a two to three page paper with the following:

1. Compute the debt ratio of your company (total liabilities divided by the total liabilities plus equity) and the debt to equity ratio, (total liabilities divided by total equity). Also, show these two ratios for short-term liabilities only and for long-term liabilities only.

2. Should your SLP company increase its debt or take steps to pay off its debt?

3. Compute the debt to equity ratios to Kraft and General Mills. Which of these three companies has the highest debt to equity ratio, and why? Which of these three companies has the lowest debt to equity ratio, and why?

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Solution Summary

This solution provides complete calculations in the attached Excel spreadsheet and a brief description of concepts for (1) through (3).

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