If liabilities are $75,000, two-thirds of which represent current liabilities, and total assets are
$500,000, what is the ratio of Stockholders' Equity to Total Equities?
A)10 percent
B)6)7 percent
C)12.5 percent
D)85 percent

Question

Quizplus · Accepted Answer

Stockholders' Equity = Total Assets - Total Liabilities. Here, Total Liabilities = $75,000. So, Stockholders' Equity = $500,000 - $75,000 = $425,000. Total Equities = Stockholders' Equity + Total Liabilities = $425,000 + $75,000 = $500,000. The ratio of Stockholders' Equity to Total Equities = $425,000 / $500,000 = 0.85 or 85%.

If Liabilities Are $75,000, Two-Thirds of Which Represent Current Liabilities