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12 January, 09:49

A corporation reports the following year-end balance sheet data. The company's debt ratio equals: Cash $ 40,000 Current liabilities $ 75,000 Accounts receivable 55,000 Long-term liabilities 35,000 Inventory 60,000 Common stock 100,000 Equipment 145,000 Retained earnings 90,000 Total assets $ 300,000 Total liabilities and equity $ 300,000 0.58 1.27 2.07 0.37 0.63

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  1. 12 January, 11:30
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    0.37

    Explanation:

    The formula to compute the debt ratio is shown below:

    = Total liabilities : Total assets

    where,

    Total liabilities would be

    = Current liabilities + Long term liabilities

    = $75,000 + $35,000

    = $110,000

    And, the total assets would be

    = $300,00

    Now put these values to the above formula

    So, the ratio would equal to

    = $110,000 : $300,000

    = 0.37
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