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Question

At the end of last year, Max Ltd’s assets and liabilities are:

Total assets = 85500

Accrued liabilities = 6500

Bonds payable = 37500

Max Ltd’s debt-to-equity ratio is:

A 0.904 Correct Answer Incorrect Answer
B 1.06 Correct Answer Incorrect Answer
C 0.85 Correct Answer Incorrect Answer
D 0.88 Correct Answer Incorrect Answer
E 0.95 Correct Answer Incorrect Answer

Solution

Assets – Liabilities = Shareholders’ Equity               85500 – (6500+37500) = 41500                Debt-Equity ratio = Debt/Equity = 37500/41500 = 0.904               Debt will include bonds payable. Accrued liabilities are current liabilities

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