Based on the information in Table 4-2, the debt ratio is Table 4-2 Drummond Company Balance...

 

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Based on the information in Table 4-2, the debt ratio is Table 4-2 Drummond Company Balance Sheet Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less: accum. depr. Net fixed assets Total assets Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Common Stock (100,000 shares) Retained Earnings Total liabilities and owner's equity Net sales (all credit) Less: Cost of goods sold Selling and administrative expense Depreciation expense Interest expense Earnings before taxes. Income taxes Net income 2,800,000 (1,087,500) " $400,000 1,415,000 1,847,500 24,000 3,686,500 1,712,500 $5,399,000 $600,000 875,000 92,000 $1,567,000 900,000 700,000 2,232,000 $5,399,000 $6,375,000 (4,375,000) (1,000,000) (135,000) (100,000) $765,000 (306,000) $459,000 Based on the information in Table 4-2, the debt ratio is Table 4-2 Drummond Company Balance Sheet Assets: Cash and marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Fixed assets Less: accum. depr. Net fixed assets Total assets Liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term debt Common Stock (100,000 shares) Retained Earnings Total liabilities and owner's equity Net sales (all credit) Less: Cost of goods sold Selling and administrative expense Depreciation expense Interest expense Earnings before taxes. Income taxes Net income 2,800,000 (1,087,500) " $400,000 1,415,000 1,847,500 24,000 3,686,500 1,712,500 $5,399,000 $600,000 875,000 92,000 $1,567,000 900,000 700,000 2,232,000 $5,399,000 $6,375,000 (4,375,000) (1,000,000) (135,000) (100,000) $765,000 (306,000) $459,000

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To calculate the debt ratio we need to find the total liabilities and then divide it by the to... View the full answer