On January 1, 2011, a company has assets of $16 billion and stockholders' equity of $8 billion. On January 1, 2012, the same company has assets of $20 billion and stockholders' equity of $9 billion. During 2011, the
Company had total sales revenue of $9 billion and total expenses of $7 billion. The company's debt -to-assets ratio on January 1, 2012 is:
A) 0.55
B) 0.45
C) 0.035
D) 0.01

Question

Quizplus · Accepted Answer

The debt-to-assets ratio is calculated as (Total Assets - Stockholders' Equity) / Total Assets. On January 1, 2012, this is ($20 billion - $9 billion) / $20 billion = $11 billion / $20 billion = 0.55.

On January 1, 2011, a Company Has Assets of $16