Question

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 $10,010,000 $1,674,071 Current liabilities 14,873,000 1,471,110 Long-term debt 15,574,000 1,530,967 Other long-term liabilities 12,816,000 716,013 Stockholders' equity 32,215,000 1,036,749 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place.

Answer 1

Answer:

Please see answer below

Explanation:

a. Determine the ratio of liabilities to stockholder's equity for both companies

Debt to equity ratio = Total liabilities / Shareholder's equity

• Mondelez

Total liabilities = 14,873,000 + 15,574,000 + 12,816,000

= 43,263,000

Shareholder's equity = 32,215,000

Debt to equity ratio = 43,263,000/32,215,000

= 1.34

• Hershey

Total liabilities = 1,471,110 + 1,530,167 + 716,013

= 3,717,290

Shareholder's equity = 1,036,749

Debt to equity ratio = 3,717,290/1,036,749

= 3.59

b. Determine the ratio of fixed assets to long-term liabilities for both companies

•Ratio of fixed assets to long term liabilities = Fixed assets/Longterm liabilities

•Mondelez

Fixed assets = 10,010,000

Long term liabilities = 15,574,000 + 12,816,000

= 10,010,000/28,390,000

= 0.35

• Hershey

Fixed assets = 1,674,071

Long term liabilities = 1,530,167 + 716,013

= 2,246,180

= 1,530,167/2,246,180

= 0.68