Use the present value and future value tables included in Appendix 8 and on the textbook companion website.
-Hakeem, Inc. reported the following data in its 2011 financial statements: total liabilities $38,400; total stockholders' equity, $19,200; net income, $4,320; income tax expense, $2,880; and interest expense, $2,400. The debt ratio is

Question

Use the present value and future value tables included in Appendix 8 and on the textbook companion website. 
-Hakeem, Inc. reported the following data in its 2011 financial statements: total liabilities $38,400; total stockholders' equity, $19,200; net income, $4,320; income tax expense, $2,880; and interest expense, $2,400. The debt ratio is

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. We can determine total assets by adding total liabilities and total stockholders' equity:

Total assets = Total liabilities + Total stockholders' equity
Total assets = $38,400 + $19,200
Total assets = $57,600

Therefore, the debt ratio is:

Debt ratio = Total liabilities / Total assets
Debt ratio = $38,400 / $57,600
Debt ratio = 0.67 or 67%

So, the correct answer is B) 67%.

Use the Present Value and Future Value Tables Included in Appendix