At the beginning of the year,Norwood Pass Industries had $240,000 in total assets and a debt-to-assets ratio of 0.5 or 50%.During the year,Norwood's assets increased by $80,000,and its liabilities increased by $72,000.What is the debt-to-assets ratio at the end of the year?
A)0.6 or 60%
B)0.4 or 40%
C)0.9 or 90%
D)1.7 or 170%

Question

Quizplus · Accepted Answer

Debt-to-assets ratio = Total liabilities ÷ Total assets
Total liabilities = Debt-to-assets ratio × Total assets
Beginning of year:
= 0.50 × $240,000 = $120,000
Debt-to-assets ratio = Total liabilities ÷ Total assets
= ($120,000 + $72,000)÷ ($240,000 + $80,000)= 0.60 = 60%

At the Beginning of the Year,Norwood Pass Industries Had $240,000