Final answer:
The debt-equity ratio assesses a company's financial structure and risk. Organic Chicken Company's total debt is $352,800 based on the given ratio and total equity. A higher return on assets suggests better profitability and efficient asset utilization.
Step-by-step explanation:
a) The debt-equity ratio measures the proportion of a company's financing that comes from debt compared to equity. It is calculated by dividing total debt by total equity. The ratio indicates the level of financial risk a company has and its ability to pay back its debt obligations. A higher debt-equity ratio suggests higher financial risk.
b) To calculate the total debt for Organic Chicken Company, multiply the debt-equity ratio by the total equity. In this case, the total debt would be $352,800 (0.70 x $504,000).
c) The return on assets (ROA) measures a company's profitability and efficiency in generating profits from its assets. It is calculated by dividing net income by total assets. A higher ROA indicates better profitability and efficient use of assets. In the case of Organic Chicken Company, the ROA is 9.20 percent.
d) To calculate the total assets of Organic Chicken Company, divide the return on assets by the ROA. In this case, the total assets would be $5,478,260 ($504,000 / 0.0920).