Brighton Company has a debt-to-assets ratio of 0.45.This means that:
A)stockholders' equity is 45% of total assets.
B)stockholders' equity is 55% of total assets.
C)investors provide 55% of the company's financing.
D)liabilities are 55% of equity.

Question

Quizplus · Accepted Answer

The debt-to-assets ratio measures the percentage of assets financed by creditors.
A debt-to-assets ratio of 0.45 means that liabilities are 45% of its assets and stockholders' equity is then 55% (or 100% − 45%)of assets.

Brighton Company Has a Debt-To-Assets Ratio of 0