long-term debt and $400,000 in current assets. The common stockholders’ equity is $400,000. The firm does not have any preferred stock outstanding. What is Flimsy Safe Room's total debt ratio defined as total liabilities to total assets?

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
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Flimsy Safe Room’s, Inc. has total assets of $1,000,000.  The firm has $100,000 in inventory.  It has $300,000 in long-term debt and $400,000 in current assets.  The common stockholders’ equity is $400,000.  The firm does not have any preferred stock outstanding.  What is Flimsy Safe Room's total debt ratio defined as total liabilities to total assets?

 

Question 1 options:

 

A) 

0.6 = 60%

 

B) 

0.4 = 40%

 

C) 

0.5 = 50%

 

D) 

0.3 = 30%

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