Test Exam 2 Time Remaining 01 113 This Question 1 pt 43 of 3

Test: Exam 2 Time Remaining: 01 113 This Question: 1 pt 43 of 32 (12 complete) This Test: 32 Total assets Current liabilities Long-term liabilities $625,000 $58,000 $274,000 $522,000 $52,000 5245,000 $225,000 $522,000 Common stockholders\' equity Total liabilities and stockholders equity $293,000 $625,000 Inventory and prepaid expenses account for $30,000 of the current years current assets Average inventory for the current year is $36,250 Average net accounts receivable for the current year is $45.000 There are 35,000 shares of common stock outstanding Total dividends paid during the current year were $17.000 The market price per share of common stock is $20 What is the debt ratio for the current year? OA 051 OB. 1.97 C. 191 D. 0.53

Solution

Correct Answer (D) 0.53

Calculation

Debt Ratio

Numerator

/

Denominator

Debt Ratio

Total Debt

/

Total Assets

Debt Ratio

(58000+274000)

/

$               625,000.00

0.53

to 1

Debt Ratio
Numerator	/	Denominator	Debt Ratio
Total Debt	/	Total Assets	Debt Ratio
(58000+274000)	/	$               625,000.00	0.53	to 1