Given the following Year 12 balance sheet data for a footwear company: Balance S

Question

Given the following Year 12 balance sheet data for a footwear company:

Balance Sheet Data Cash on Hand 10,000 Total Current Assets 70,000 Total Assets 280,000 Overdraft Loan Payable 5,000 1-Year Bank Loan Payable 10,000 Current Portion of Long-Term Loans 17,000 Total Current Liabilities 48,000 Long-Term Bank Loans Outstanding 90,000 Shareholder Equity: Year 11 Balance Year 12 Change Common Stock 10,000 0 10,000 Additional Capital 90,000 0 90,000 Retained Earnings 30,000 12,000 42,000 Total Shareholder Equity 130,000 +12,000 142,000

Explanation / Answer

Answer:-

Debt - Assets Ratio = [Short term debt + Long term Debt] / Total Assets

= [(5000 + 10000 + 17000) + 90000] / 280000

= [32000 + 90000] / 280000

= 122000 / 280000

= .436

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