Aston Corporation has a .7 to 1 ratio of stockholders' equity to total liabilities. If stockholders' equity is $420,000, then its total liabilities are $180,000.

Question

Quizplus · Accepted Answer

To find the total liabilities, we need to use the ratio given:

Stockholders' equity / Total liabilities = 0.7 / 1

Plugging in the given value for stockholders' equity:

$420,000 / Total liabilities = 0.7

Multiplying both sides by Total liabilities:

Total liabilities = $600,000

Therefore, the correct answer is B, as the statement "its total liabilities are $180,000" is incorrect.

Aston Corporation Has a