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
