A company reports the following in relation to its latest financial year:
$$\begin{array} { l r }
\text { Current assets } & \$ 300 \
\text { Non-current assets } & 700 \
\text { Current liabilities } & 150 \
\text { Non-current liabilities } & 250 \
\text { Shareholders' equity } & 600
\end{array}$$
If the company earns a net profit after tax in the following year of $40,all received in cash,and uses this cash to repay some of its non-current liabilities,and there are no other changes in its balance sheet,its total-debt-to-equity ratio will be:
A) unchanged
B) 36.0%
C) 56.25%
D) 34.6%

Question

A company reports the following in relation to its latest financial year:
$$\begin{array} { l r } 
\text { Current assets } & \$ 300 \
\text { Non-current assets } & 700 \
\text { Current liabilities } & 150 \
\text { Non-current liabilities } & 250 \
\text { Shareholders' equity } & 600
\end{array}$$
If the company earns a net profit after tax in the following year of $40,all received in cash,and uses this cash to repay some of its non-current liabilities,and there are no other changes in its balance sheet,its total-debt-to-equity ratio will be:
A) unchanged
B) 36.0%
C) 56.25%
D) 34.6%

Quizplus · Accepted Answer

The Answer is B

A Company Reports the Following in Relation to Its Latest