At the end of the current year, the following information is available for both Kumar Company and Asher Company.
|
|
Kumar Company |
Asher Comapany |
|
Total assets |
$2,254,500 |
$1,123,500 |
|
Total liabilities |
904,500 |
598,500 |
|
Total equity |
1,350,000 |
525,000 |
Required
1. Compute the debt to equity ratios for both companies.
2. Comment on your results and discuss the riskiness of each company’s financing structure.