Stewart Company Balance Sheet ?Assets: ? ? Cash and marketable securities ? ?$60
ID: 2618166 • Letter: S
Question
Stewart Company
Balance Sheet
?Assets:
?
?
Cash and marketable securities
?
?$600,000
Accounts receivable
?
?900,000
Inventories??
?
?1,500,000
Prepaid expenses
?
?75,000
Total current assets
?
?$3,075,000
Fixed assets
?8,000,000
?
?Less: accum. depr.
?(2,075,000)
?
Net fixed assets
?
?$5,925,000
Total assets
?
?$9,000,000
?
?
?
?Liabilities:
?
?
Accounts payable
?
?$800,000
Notes payable?????
?700,000
Accrued taxes
?
?50,000
Total current liabilities
?
?$1,550,000
Longminus
term
debt
?
?2,500,000
?Owner's equity? (1 million shares of common stock? outstanding)
?
?4,950,000
Total liabilities and? owner's equity
?
?$9,000,000
?
?
?
Net sales? (all credit)
?
?$10,000,000
?Less: Cost of goods sold
?
?(3,000,000)
Selling and administrative expense
?
?(2,000,000)
Depreciation expense
?
?(250,000)
Interest expense
?
?(200,000)
Earnings before taxes
?
?4,550,000
Income taxes
?
?(1,820,000)
Net income
?
?$2,730,000
?Assets:
?
?
Cash and marketable securities
?
?$600,000
Accounts receivable
?
?900,000
Inventories??
?
?1,500,000
Prepaid expenses
?
?75,000
Total current assets
?
?$3,075,000
Fixed assets
?8,000,000
?
?Less: accum. depr.
?(2,075,000)
?
Net fixed assets
?
?$5,925,000
Total assets
?
?$9,000,000
?
?
?
?Liabilities:
?
?
Accounts payable
?
?$800,000
Notes payable?????
?700,000
Accrued taxes
?
?50,000
Total current liabilities
?
?$1,550,000
Longminus
term
debt
?
?2,500,000
?Owner's equity? (1 million shares of common stock? outstanding)
?
?4,950,000
Total liabilities and? owner's equity
?
?$9,000,000
?
?
?
Net sales? (all credit)
?
?$10,000,000
?Less: Cost of goods sold
?
?(3,000,000)
Selling and administrative expense
?
?(2,000,000)
Depreciation expense
?
?(250,000)
Interest expense
?
?(200,000)
Earnings before taxes
?
?4,550,000
Income taxes
?
?(1,820,000)
Net income
?
?$2,730,000
Calculate the debt ratioExplanation / Answer
Debt Ratio = Total Debt / Total Assets
= [ $ 9000000 - $ 4950000 ] / $ 9,000,000
= 4050000 / 9000000
= 45.0%
Generally we will consider Long term debt, here he might have considered all debt.
OPtion C is correct.
Pls comment, if any further assistance is required.
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