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7. Wireless Communications has a total asset turnover of 2.66, total liabilities of $1,004,162, and sales...

7. Wireless Communications has a total asset turnover of 2.66, total liabilities of $1,004,162, and sales revenues of $7,025,000. What is Wireless’s debt ratio?

  1. 38.0%                                   C. 14.3%
  2. 26.7%                                           D.   81.1%
  1. The least risky investment is:
  1. Investment in long term bonds                                          
  2. Investment in Treasury bills
  3. Investment in large companies     common stocks
  4. Investment in common stocks of small companies

Please answer the 2 questions because i dont have enough money..

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Homework Answers

Answer #1

Question a:

Total Liabilities = $1,004,162

Sales Revenues = $7,025,000

Total asset turnover ratio = 2.66

Net Sales / Total Assets = 2.66

$7,025,000 / Total Assets = 2.66

Total Assets = $2,640,977.44

Equity = Total Assets - Total liabilities = $2,640,977.44 - $1,004,162 = $1,636,815.44

Debt Ratio = Total Liabilities / Total Assets

= $1,004,162 / $2,640,977.44

= 0.380223619

Therefore, debt ratio is 38.0%

Option A is correct

Question b:

The least risk investment is investment in treasury bills.

They are less risky and provides less returns when compared to other investments

Option B is correct

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