Using the following balance sheet and income statement data for Castillo Company what is the company's debt to assets ratio? $$\begin{array} { l r l r }
\text { Current assets } & \$ 41,000 & \text { Net income } & \$ 48,000 \
\text { Current liabilities } & 22,000 & \text { Stockholders' equity } & 75,000 \
\text { Average assets } & 210,000 & \text { Total liabilities } & 125,000 \
\text { Total assets } & 200,000 & &
\end{array}$$
A)24.3 percent
B)35.7 percent
C)37.5 percent
D)62.5 percent

Question

Using the following balance sheet and income statement data for Castillo Company what is the company's debt to assets ratio? $$\begin{array} { l r l r } 
\text { Current assets } & \$ 41,000 & \text { Net income } & \$ 48,000 \
\text { Current liabilities } & 22,000 & \text { Stockholders' equity } & 75,000 \
\text { Average assets } & 210,000 & \text { Total liabilities } & 125,000 \
\text { Total assets } & 200,000 & &
\end{array}$$
A)24.3 percent
B)35.7 percent
C)37.5 percent
D)62.5 percent

Quizplus · Accepted Answer

The debt to assets ratio is calculated by dividing total liabilities by total assets. For Castillo Company, this is $125,000 / $200,000 = 0.625 or 62.5 percent.

Using the Following Balance Sheet and Income Statement Data for Castillo