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The following balances and amounts were taken from the financial statements of Freddo, Inc
The following balances and amounts were taken from the financial statements of Freddo, Inc. Cash Accounts receivable Gross profit Net sales Net income Shareholders' equity Total assets $200,000 47.000 350.000 800,000 46.000 200.000 400.000 The debt to total assets ratio is 50% 40% 3036 60%
Expert Solution
Answer :-
The Correct Answer is Option - 50%
Explanation :-
Debt to total assets = Total liabilities / Total Assets
Total Assets = $400,000
Shareholders' Equity = $200,000
We know that in Basic Accounting Equation -
Total Assets = Shareholders' Equity + Total liabilities
Total liabilities = Total Assets - Shareholders' Equity
Total liabilities = $400,000 - $200,000
Total liabilities = $200,000
Debt to total assets = $200,000 / $400,000
Debt to total assets = 0.5 or 50%
Therefore, The Correct Answer is Option - 50%
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