The following financial statement data are taken from Xeron Company's 2012 annual report:
$\begin{array}{lccc}
&\text { (in millions) }\
\text {Current assets } & \$12.8\
\text {Investments } &9.4\
\text { Intangibles } &6.8\
\text {Property, plant, and equipment } &58.1\
\text { Current liabilities } &6.4\
\text { Long-term debt} &39.7\
\text {Stockholders' equity } &40.8
\end{array}$

Compute the debt ratio.
A)196.9%
B)113.0%
C)53.0%
D)45.7%
E)none of the answers are correct

Question

The following financial statement data are taken from Xeron Company's 2012 annual report:
$\begin{array}{lccc}
&\text { (in millions) }\
  \text {Current assets  } &  \$12.8\
 \text {Investments  } &9.4\
 \text { Intangibles } &6.8\
 \text {Property, plant, and equipment  } &58.1\
 \text { Current liabilities } &6.4\
 \text {  Long-term debt} &39.7\
 \text {Stockholders' equity  } &40.8
\end{array}$

Compute the debt ratio.
A)196.9%
B)113.0%
C)53.0%
D)45.7%
E)none of the answers are correct

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. Total liabilities = Current liabilities + Long-term debt = 6.4 + 39.7 = 46.1 million. Total assets = Current assets + Investments + Intangibles + Property, plant, and equipment = 12.8 + 9.4 + 6.8 + 58.1 = 87.1 million. Debt ratio = (46.1 / 87.1) * 100% = 52.9%, which rounds to 53.0%.

The Following Financial Statement Data Are Taken from Xeron Company's