17
May
May
Simon and Luke Incorporated has a debt ratio of 0.42, noncurrent liabilities of $20,000 and total assets of $70,000.
a.) $8,400
b.) $9,400
c.) $12,348
d.) $10,600
Please explain your answer
Answer:
A ratio that indicates what proportion of debt a company has relative to assets. It is calculated by dividing total debts by total assets.
Debt ratio: Debt / Total Assets = 0.42
Debt = 0.42 x Total assets
Debt = $29,400
If total debt is $29,400 and noncurrent liabs = $20,000, then current liabs must be $9,400 - Answer b
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