Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities Recent balance sheet information for two companies in the food industry, Mondelez International, Inc., and The Hershey Company, is as follows (in thousands):   Mondelez Hershey Net property, plant, and equipment $8,482,000   $2,130,294   Current liabilities 16,737,000   2,418,566   Long-term debt 12,532,000   3,254,280   Other long-term liabilities 7,747,000   622,908   Stockholders' equity 25,713,000   1,407,266   a.  Determine the ratio of liabilities to stockholders' equity for both companies. Round your answers to one decimal place. Mondelez fill in the blank 1 Hershey fill in the blank 2 b.  Determine the ratio of fixed assets to long-term liabilities for both companies. Round your answers to one decimal place. Mondelez fill in the blank 3 Hershey fill in the blank 4 c.  Although Hershey  uses more debt, it has slightly stronger  creditor protection and borrowing capacity.

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Chapter1: Financial Statements And Business Decisions
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Ratio of Liabilities to Stockholders' Equity and Ratio of Fixed Assets to Long-Term Liabilities

Recent balance sheet information for two companies in the food industry, Mondelez International, Inc., and The Hershey Company, is as follows (in thousands):

  Mondelez Hershey
Net property, plant, and equipment $8,482,000   $2,130,294  
Current liabilities 16,737,000   2,418,566  
Long-term debt 12,532,000   3,254,280  
Other long-term liabilities 7,747,000   622,908  
Stockholders' equity 25,713,000   1,407,266  

a.  Determine the ratio of liabilities to stockholders' equity for both companies. Round your answers to one decimal place.

Mondelez fill in the blank 1
Hershey fill in the blank 2

b.  Determine the ratio of fixed assets to long-term liabilities for both companies. Round your answers to one decimal place.

Mondelez fill in the blank 3
Hershey fill in the blank 4

c.  Although Hershey  uses more debt, it has slightly stronger  creditor protection and borrowing capacity.

Expert Solution
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Ratios are a powerful accounting tool in assessing the health and efficiency of a company. Ratios utilize both the income statement and balance sheet in calculations.

 

Ratio of liabilities to stockholders' equity = Liabilities / Stockholder’s equity

 ratio of fixed assets to long-term liabilities =  Fixed assets / Long term liabilities

 

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