IBD Corporation has Current Assets of $200,000, Long Term Assets of $300,000, Current Liabilities of $100,000, Long Term Liabilities of $200,000, Paid in Capital of $150,000, and Retained Earnings of $50,000. Calculate IBD's debt to assets ratio?

Question

Quizplus · Accepted Answer

Debt to assets ratio = Total Liabilities ÷ Total Assets
Total Liabilities = Current Liabilities + Long Term Liabilities = $100,000 + $200,000 = $300,000
Total Assets = Current Assets + Long Term Assets = $200,000 + $300,000 = $500,000
Debt to assets ratio = Total Liabilities ÷ Total Assets = $300,000 ÷ $500,000 = 0.6 or 60%.
Therefore, the correct answer is B.

IBD Corporation Has Current Assets of $200,000, Long Term Assets