Selected financial information presented below was obtained from the financial statements of Terripin Industries: $\begin{array}{lr}
\text { Current Assets } & \$ 80,000 \
\text { Property and Equipment, net } & 120,000 \
\text { Current Liabilities } & 90,000 \
\text { Noncurrent Liabilities } & 70,000 \
\text { Stockholder's Equity } & 40,000 \
\text { Sales Revenue } & 100,000 \
\text { Net Income } & 36,000
\end{array}$ What is the debt-to-assets ratio?
A)0.35
B)0.80
C)0.20
D)1.00

Question

Quizplus · Accepted Answer

The debt-to-assets ratio is calculated by dividing total debt (sum of current and noncurrent liabilities) by total assets (sum of current assets and property and equipment, net). Here, total debt = $90,000 (current liabilities) + $70,000 (noncurrent liabilities) = $160,000. Total assets = $80,000 (current assets) + $120,000 (property and equipment, net) = $200,000. Thus, the debt-to-assets ratio = $160,000 / $200,000 = 0.80.

Selected Financial Information Presented Below Was Obtained from the Financial