The 2008 financial statements for Carmela's Catering are as follows: The firm has 100,000 shares of common stock outstanding with a market value of $8 a share.
-Refer to the information above. Calculate the total liabilities-to-total assets ratio, based on book values, for the firm. Round your answer to the nearest tenth of a percent.

Question

The 2008 financial statements for Carmela's Catering are as follows:   The firm has 100,000 shares of common stock outstanding with a market value of $8 a share.
-Refer to the information above. Calculate the total liabilities-to-total assets ratio, based on book values, for the firm. Round your answer to the nearest tenth of a percent.

Quizplus · Accepted Answer

The total liabilities-to-total assets ratio is calculated by dividing total liabilities by total assets. In this case, total liabilities are $1,000,000 and total assets are $2,480,000. Therefore, the total liabilities-to-total assets ratio is $1,000,000 / $2,480,000 = 0.402, or 40.2%.

The 2008 Financial Statements for Carmela's Catering Are as Follows