The following partial balance sheet is provided for Groom Company:
$\begin{array}{lcc}\text { Liabilities and Stockholders' Equity }\
\text { Accounts payable } &\$9,000\
\text { Salaries payable } &12,000\
\text { Bonds payable (due in ten years) } &20,000\
\text { Common stock, no par }&30,000 \
\text { Retained earnings } & 54,000 \
\text { otal liabilities and stockholders' equity } & \$ 125,000\
\end{array}$
What is the company's debt to assets ratio? (Rounded to nearest whole percent.)

Question

The following partial balance sheet is provided for Groom Company:
$\begin{array}{lcc}\text { Liabilities and Stockholders' Equity }\
\text { Accounts payable } &\$9,000\
\text { Salaries payable } &12,000\
\text { Bonds payable (due in ten years) } &20,000\
\text { Common stock, no par }&30,000 \
\text { Retained earnings } & 54,000 \
 \text { otal liabilities and stockholders' equity } & \$ 125,000\
\end{array}$
What is the company's debt to assets ratio? (Rounded to nearest whole percent.)

Quizplus · Accepted Answer

The debt to assets ratio is calculated by dividing total liabilities by total assets. Total liabilities are $9,000 (accounts payable) + $12,000 (salaries payable) + $20,000 (bonds payable) = $41,000. Total assets can be inferred from the total liabilities and stockholders' equity, which is $125,000. Thus, the debt to assets ratio is $41,000 / $125,000 = 0.328, or 33% when rounded to the nearest whole percent.

The Following Partial Balance Sheet Is Provided for Groom Company