The following information was taken from Charu Company’s balance sheet: Fixed assets (net) $2,000,000 Long-term liabilities 800,000

The following information was taken from Charu Company’s balance sheet:

Fixed assets (net) $2,000,000
Long-term liabilities 800,000
Total liabilities 1,000,000
Total stockholders’ equity 625,000

Determine the company’s (a) ratio of fixed assets to longterm liabilities and (b) ratio of liabilities to stockholders’ equity.

Answer:












a. Ratio of Fixed Assets to Long-Term Liabilities
Ratio of Fixed Assets to Long-Term Liabilities
Ratio of Fixed Assets to Long-Term Liabilities
b.   Ratio of Liabilities to Stockholders’ Equity
Ratio of Liabilities to Stockholders’ Equity
Ratio of Liabilities to Stockholders’ Equity
=

=   $2,000,000 ÷ $800,000

=   2.5

= Total Liabilities
Total Stockholders’ Equity

=   $1,000,000 ÷ $625,000

=   1.6