Using the following balance sheet and income statement data, what is the debt to assets ratio? $$\begin{array} { l c l l }
\text { Current assets } & \$ 32,000 & \text { Net income } & \$ 42,000 \
\text { Current liabilities } & 16,000 & \text { Stockholders' equity } & 78,000 \
\text { Average assets } & 160,000 & \text { Total liabilities } & 42,000 \
\text { Total assets } & 120,000 & & \
\text { Average common shares outstanding was } 15,000 .
\end{array}$$
A)26 percent
B)13 percent
C)65 percent
D)35 percent

Question

Using the following balance sheet and income statement data, what is the debt to assets ratio? $$\begin{array} { l c l l } 
\text { Current assets } & \$ 32,000 & \text { Net income } & \$ 42,000 \
\text { Current liabilities } & 16,000 & \text { Stockholders' equity } & 78,000 \
\text { Average assets } & 160,000 & \text { Total liabilities } & 42,000 \
\text { Total assets } & 120,000 & & \
\text { Average common shares outstanding was } 15,000 .
\end{array}$$
A)26 percent
B)13 percent
C)65 percent
D)35 percent

Quizplus · Accepted Answer

The debt to assets ratio is calculated as Total Liabilities divided by Total Assets. Here, it is $42,000 / $120,000 = 0.35 or 35 percent.

Using the Following Balance Sheet and Income Statement Data, What