Question

The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017.
December 31 2016 2017
Cash $51,935 $9,612
Accounts receivable 28,191 22,102
Office supplies 4,447 3,257
Office equipment 136,500 145,400
Trucks 53,418 62,418
Building 0 178, 072
Land 0 44,436
Accounts payable 74, 115 36,759
Note payable 0 122,508
Compute the 2017 year-end debt ratio for the business.

Answer 1

Answer:

34.22%

Explanation:

Debt ratio can be calculated by dividing the total liabilities with the total assets.

Calculation

Debt Ratio = Total liabilities / Total Assets

Debt Ratio = 159,267 / 465,297

Debt Ratio = 34.22%

Working        

Cash                                     9,612      

Accounts receivable          22,102      

office supplies                    3,257      

office equipment               145,400      

Trucks                                 62,418      

Building                              178,072      

Land                                    44,436      

total assets                        465,297      

Total liabilities        

Accounts payable             36,759      

Note payable                    122,508      

Total liabilities                  159,267