Question

On December 31, 2015, a company had assets of $36 billion and stockholders' equity of $32 billion. That same company had assets of $48 billion and stockholders' equity of $10 billion as of December 31, 2016. During 2016, the company reported total sales revenue of $29 billion and total expenses of $27 billion. What is the company's debt-to-assets ratio on December 31, 2016

Answer 1

0.79 times

Step-by-step explanation:

The computation of debt-to-assets ratio is shown below:-

For computing the debt-to-assets ratio first we need to find out the total debt which is given below:-

Total Debt = Assets - Stockholders' equity

= $48 billion - $10 billion

= $38 billion

Debt-to-assets ratio = Total Debt ÷ Total Assets

= $38 billion ÷ $48 billion

= 0.79 times

So, for computing the debt-to-assets ratio we simply applied the above formula.