The classified balance sheet for Thorn, Inc., as of December 31, 2010, is presented next.

Requirements 1. Calculate Thorn’s debt ratio as of December 31, 2010.
2. What percentage of Thorn’s assets belong to the stockholders?
3. Would you be willing to extend credit to Thorn, Inc? Why or why not?

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Thorn, Inc. Balance Sheet December 31, 2010 ASSETS Current Assets: LIABILITIES Current Liabilities: Cash $ 6,600 Accounts Payable $ 10,200 Accounts Receivable 10,100 Salary Payable 1,900 Supplies 1,300 Unearned Service Revenue 17,700 Prepaid Rent 2,800 Note Payable 10,000 Total Current Assets $ 20,800 Total Current Liabilities 39,800 Fixed Assets: Long-Term Debt: Land Equipment $ 40,000 55,000 Mortgage Note Payable Bonds Payable 30,000 110,000 Less: Accumulated Total Long-Term Debt 140,000 Depreciation, Equipment 14,000 26,000 Building 225,000 STOCKHOLDERS' EQUITY Less: Accumulated Common Stock 8,000 Depreciation, Building 90,000 135,000 Retained Earnings 49,000 Total Fixed Assets 216,000 Total Stockholders' Equity 57,000 Total Liabilities and Total Assets $236,800 Stockholders' Equity $236,800