Question

The following information was drawn from the accounting records of Woo Company.

Current assets $ 50,000
Long-term assets 350,000
Current liabilities 40,000
Long-term liabilities 100,000
Stockholders' Equity 260,000
Net Income 60,000
Based on this information, the company's debt to assets ratio is: ____________?(round your answer to the nearest whole percentage.)

Answer 1

The debt to assets ratio for Woo Company is calculated by dividing the total liabilities ($140,000) by the total assets ($400,000), which equals 0.35. When multiplied by 100, this yields a ratio of 35%.

Step-by-step explanation:

The debt to assets ratio can be calculated using the following information:

Total Assets = Current Assets + Long-term Assets = $50,000 + $350,000 = $400,000

Total Liabilities = Current Liabilities + Long-term Liabilities = $40,000 + $100,000 = $140,000

The formula for the debt to assets ratio is:

Total Liabilities / Total Assets

Applying the values:

Debt to assets ratio = Total Liabilities / Total Assets

= $140,000 / $400,000

= 0.35

To express this as a percentage, we multiply by 100:

0.35 x 100 = 35%

Therefore, the debt to assets ratio for Woo Company, rounded to the nearest whole percentage, is 35%.

Answer 2

The company's debt to assets ratio is 0.35 (35%)

Step-by-step explanation:

The debt to total assets ratio is an indicator of a company's financial leverage. It is calculated by total amount of a company's liabilities divided by the total amount of the company's assets with the following fomula:

Debt to assets ratio = Total Debt/ Total assets

Total Debt = Current liabilities + Long-term liabilities = $40,000+$100,000 = $140,000

Total Assests = Current assets + Long-term assets = $50,000+$350,000 = $400,000

Debt to assets ratio = $140,000/$400,000 = 0.35 (35%)