Total debt ratio is the ratio of total debt to total assets
i.e
Total debt ratio = Total debt / Total assets
But Total assets is nothing but total equity plus total debt
Now let us consider,
TD = Total debt
TE = Total equity
TA= Total assets
Therefore,
Total debt ratio = TD/TA
But as mentioned above
TA = TD + TE
total debt ratio = Total debt/(total debt+total equity)
total debt ratio = .34(given)
.34 = TD / (TD + TE)
Solving this equation yields:
0.34 = 1/(1+ TE/TD)
0.34(1+TE/TD) = 1
0.34 + 0.34TE/TD =1
.34(TE/TD) = 1 - 0.34
0.34 (TE/TD) = 0.66
0.34TE = 0.66TD
Now, Debt equity ratio is the ratio of Total debt to total equity
Debt-equity ratio = TD / TE
Debt-equity ratio = 0.34 / 0.66
Debt-equity ratio = 0.51515152
Answer: $37000
Explanation:
The projected benefit obligation was underfunded at the end of 2021 by:
PBO December 31 = $276,000
Less: Pension plan assets (fair value) December 31 = $239,000.
Then, the projected benefit obligation was underfunded at the end of 2021 by ($276000 - $239000) = $37000
Answer:
Current ratio will be overstated
Explanation:
Current ratio measures the short term solvency of a firm. In other words, it measures the ability of the firm to meet its current obligations. It is the ratio of current assets to current liabilities.
A part of long term liability that is to be paid this year is considered current liabilities. If today's fashion continues to report debt due in the current year as long term liability, then current liabilities reported would be lesser than the actual position. As such, current ratio calculated would be higher than what it is actually. So, current ratio will be overstated in this case.