The following partial balance sheet is provided for Groome Company: $$\begin{array}{l}
\text { Liabilities and Stockholders' Equity }\
\begin{array} { l r }
\text { Accounts payable } & \$ 9,000 \
\text { Salaries payable } & 12,000 \
\text { Bonds payable (due in ten years) } & 20,000 \
\text { Common stock, no par } & 30,000 \
\text { Retained earnings } & 54,000 \
\text { Total liabilities and stockholders' equity } & \$ 125,000
\end{array}
\end{array}$$ What is the company's debt to assets ratio? (Rounded to nearest whole percent.)
A) 49%
B) 16%
C) 33%
D) Cannot be determined with the information given.

Question

The following partial balance sheet is provided for Groome Company: $$\begin{array}{l}
\text { Liabilities and Stockholders' Equity }\
\begin{array} { l r } 
\text { Accounts payable } & \$ 9,000 \
\text { Salaries payable } & 12,000 \
\text { Bonds payable (due in ten years) } & 20,000 \
\text { Common stock, no par } & 30,000 \
\text { Retained earnings } & 54,000 \
\text { Total liabilities and stockholders' equity } & \$ 125,000
\end{array}
\end{array}$$ What is the company's debt to assets ratio? (Rounded to nearest whole percent.)
A) 49%
B) 16%
C) 33%
D) Cannot be determined with the information given.

Quizplus · Accepted Answer

The debt to assets ratio is calculated by dividing total liabilities by total assets. From the given partial balance sheet, total liabilities are $330,000 and total assets are $1,000,000. So, the debt to assets ratio is 33% (330,000/1,000,000 x 100 = 33%). Thus, the best choice is C.

The Following Partial Balance Sheet Is Provided for Groome Company