Financial Reporting and Analysis Q195
195Steven Clark is a credit analyst. He is evaluating the solvency of NYC Public Limited. The following balance sheet extract is made use of for this analysis.
| Balance Sheet Extract(millions of USD) | 2011 | 2010 |
| Total equity | 567 | 491 |
| Long term debt | 800 | 700 |
| Other long term liabilities | 450 | 450 |
| Current liabilities | 300 | 280 |
| Total equity and liabilities | 2,117 | 1,921 |
What is the average financial leverage of the company for 2011?
- Option : B
- Explanation : Financial Leverage = Average total assets / Average total equity = ((2,117+1,921) / 2) / ((567 + 491) / 2) = 3.82
