Acme Incorporated has a debt ratio of .42,noncurrent liabilities of $20,000 and total assets of $70,000.What is Acme's level of current liabilities?
A) $8,400
B) $9,400
C) $12,348
D) $10,600

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. Given a debt ratio of .42 and total assets of $70,000, Acme's total liabilities are .42 * $70,000 = $29,400. Noncurrent liabilities are $20,000, so current liabilities are total liabilities minus noncurrent liabilities: $29,400 - $20,000 = $9,400.

Acme Incorporated Has a Debt Ratio of