Ask Question
22 November, 22:16

As a bank loan officer, you are considering a loan application by Bama Bart's Sporting Goods. The company has provided you with its balance sheet and income statement, which contain the following information: the firm's only current assets are $25,000 in cash, $45,000 in accounts receivable, and $140,000 in inventory. It has no marketable securities. The firm also has $190,000 in fixed assets, but no intangible assets. It has $70,000 in current liabilities and its long-term liabilities are $90,000. By using some of this information, you can conclude that Bama Bart's debt to owners' equity ratio (rounded to the nearest tenth of a percent) is:

+3
Answers (1)
  1. 22 November, 22:40
    0
    debt to owners' equity ratio 67%

    Explanation:

    debt to owner's equity:

    Cash 25,000

    Accounts receivable 45,000

    Inventory 140,000

    Total current assets 210,000

    Fixed Assets 190,000

    Total Assets: 400,000

    Liablities 70,000 + 90,000 = 160,000

    Using the accounting equation we solve for equity:

    Assets = Liabilies + Equity

    400,000 = 160,000 + Equity

    400,000 - 160,000 = Equity = 240,000

    debt to equity:

    160,000/240,000 = 0.67
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “As a bank loan officer, you are considering a loan application by Bama Bart's Sporting Goods. The company has provided you with its balance ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers