Question

The company has current liabilities of $530,000, long-term liabilities of $1,000,000, total assets of $2,400,000, and stockholders' equity of $870,000. The company's debt to total assets ratio is

Answer 1

The company's debt to total assets ratio is 63.75%.

What is Debt to Total Assets Ratio?

The debt to total assets ratio is a financial leverage ratio that compares a company's total debts (current and long-term liabilities) with the total assets.  The formula for the ratio is Total Debts/Total Assets x 100.

Data and Calculations:

Current liabilities = $530,000

Long-term liabilities = $1,000,000

Total assets = $2,400,000

Stockholders' equity = $870,000

The company's debt to total assets ratio = Debts/Total assets x 100

= 63.75% ($1,530,000/$2,400,000 x 100)

Thus, the company's debt to total assets ratio is 63.75%.

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