On January 1,2011,a company has assets of $16 billion and shareholders' equity of $8 billion.On January 1,2012,the same company has assets of $20 billion and shareholders' equity of $9 billion.During 2011,the company had total sales revenue of $900 million and total expenses of $700 million.The company's debt-to-assets ratio on January 1,2012 is:

Question

Quizplus · Accepted Answer

The debt-to-assets ratio is calculated as (Total Assets - Shareholders' Equity) / Total Assets. On January 1, 2012, the company's debt is $20 billion - $9 billion = $11 billion. Therefore, the debt-to-assets ratio is $11 billion / $20 billion = 0.55.

On January 1,2011,a Company Has Assets of $16 Billion and Shareholders