Question

If a company has current assets of $145,000, total assets of $1,200,000, current liabilities of $100,000, total liabilities of $660,000, and total stockholders' equity of $540,000, what is its debt to assets ratio?

Answer 1

The debt to assets ratio for a company with total liabilities of $660,000 and total assets of $1,200,000 is calculated by dividing liabilities by assets, resulting in a ratio of 0.55.

Step-by-step explanation:

The debt to assets ratio is a financial metric used to evaluate a company's financial leverage by comparing total liabilities to total assets. To calculate the debt to assets ratio, you divide the company's total liabilities by its total assets.

In this scenario, given the company's total liabilities of $660,000 and total assets of $1,200,000, the debt to assets ratio is calculated as follows:

Debt to Assets Ratio = Total Liabilities / Total Assets
Debt to Assets Ratio = $660,000 / $1,200,000
Debt to Assets Ratio = 0.55

Thus, the company's debt to assets ratio is 0.55, meaning that for every dollar of assets, the company has 55 cents in debt.