Your department's total assets of $ 405,900, when compared to your department's total liabilities of $412,987, indicates that your department has an Asset/Liability Ratio of 0.98. How would you interpret this data?

Question

Quizplus · Accepted Answer

Your department has very little liquidity when the Asset/Liability Ratio is 0.98. The assets of $405,900 reflect the value of inventory, revenue, and money owed to the department, among other things. The $412,987 in liabilities reflects things that have to be paid by the department. Some of these things are employee salaries and debts that have to be paid to a supplier or vendor, among other things. The higher the ratio, the better the financial status of the department. This ratio of 0.98 indicates that liabilities have to be decreased and/or assets have to be increased in order to ensure financial health.

Your Department's Total Assets of $ 405,900, When Compared to Your