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4 March, 21:39

A balance sheet balances assets with their sources of debt and equity financing. If a corporation has assets equal to $5,200,000 and a debt ratio of 75 %, how much debt does the corporation have on its books?

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  1. 4 March, 21:48
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    Total debt = $3,900,000

    Explanation:

    Total Assets = $5,200,000

    Debt Ratio = 75%

    Debt = 75% x $5,200,000

    =$3,900,000

    Hence, the 25% account for equity finance $1,300,000
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