Staley Tile Company has assets with a book value of $350,000 pledged against loans with a balance of $190,000.Its pledged assets to secured liabilities ratio is 1.8 to 1.

Question

Quizplus · Accepted Answer

The calculation for the pledged assets to secured liabilities ratio is:
Pledged Assets / Secured Liabilities = $350,000 / $190,000 = 1.84
Since the ratio is greater than 1, it means that the company has more pledged assets than its secured liabilities, therefore the statement is true.

Staley Tile Company Has Assets with a Book Value of $350,000