Rating Corporation's balance sheet showed the following amounts for its liability accounts: Accounts Payable, $100,000; Bonds Payable, $150,000; Taxes Payable, $20,000; and Deferred Income Tax Liability, $5,000. Total assets was $500,000. The debt to assets ratio is:

Question

Quizplus · Accepted Answer

The debt to assets ratio is calculated by dividing the total liabilities by the total assets. Therefore, ($100,000 + $150,000 + $20,000 + $5,000) / $500,000 = 0.55 or 55%. The best choice is D, which represents the calculated debt to assets ratio.

Rating Corporation's Balance Sheet Showed the Following Amounts for Its