American Bacon Inc. financial statements are presented in the table below. Based

Question

American Bacon Inc. financial statements are presented in the table below.

Based on the information in the table, calculate the firm’s total debt-to-equity ratio.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the "units" box).

Balance Sheet December 31, 2010

Income statement, Year of 2010

Cash and marketable securities $102,000 Accounts payable $287,000 Accounts receivable $299,000 Notes payable $61,200 Inventories $628,000 Accrued expenses $51,900 Prepaid expenses $10,300 Total current liabilities $400,100 Total current assets $1,039,300 Long-term debt $415,000 Gross fixed assets $1,502,000 Par value and paid-in-capital $376,000 Less: accumulated depreciation $312,000 Retained Earnings $1,038,200 Net fixed assets $1,190,000 Common Equity 1,414,200 Total assets $2,229,300 Total liabilities and owner’s equity $2,229,300

Explanation / Answer

Debt Equity Ratio = Company's Total Liabilities / Shareholders Equity

= (Short Term Debt + Long term Debt + Other Fixed payments) / Shareholders Equity

Short Term Debt = 61200

Long term Debt = 415000

Therefore, Company's total liabilities = 415000+61200

= 476200

Shareholders Equity = 1414200

Debt Equity ratio = 476200/ 1414200

= 0.34 ( approximately 34%)

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