Homework SourseJoes farm has 60000 current assets 150000 long term assets 3
Joe\'s farm has $60,000 current assets, $150,000 long term assets, $30,000 current liabilities, and $50,000 long term liabilities. Joe\'s debt to equity ratio (debt/equity or net worth) is:
Solution
ANSWER:
Current assets = $60,000
long term assets = $150,000
total assets = current assets + long term assets = $60,000 + $150,000 = $210,000
current liabilities = $30,000
long term liabilities = $50,000
total liabilities = current liabilities + long term liabilities = $30,000 + $50,000 = $80,000
total assets - total liabilities = equity
$210,000 - $80,000 = equity
equity = $130,000
debt to equity ratio = total liabilities / total equity = 80,000 / 130,000 = 8 / 13 = 0.6153
