Question

A firm's Cash balance is $6,300,000, Accounts Receivable balance is $6,700,000, Inventory balance is $5,000,000 and...

A firm's Cash balance is $6,300,000, Accounts Receivable balance is $6,700,000, Inventory balance is $5,000,000 and Fixed Assets balance is $21,000,000. The firm's Current Portion of Long Term Debt balance is $3,900,000, Accounts Payable balance is $1,700,000, Long Term Bonds balance is $29,000,000 and Retained Earnings balance is $4,400,000. What is the firm's Long Term Debt Ratio?

The answer is 86.83% - I just need to show how to get it

Homework Answers

Answer #1

Long term Debt ratio = Long term Debt/ Total Assets

see both sides

LIABILITIES ASSETS

Retained Earning = $4,400,000 Cash = $6,300,000

Long term debt = $3,900,000 Account receivable = $6,700,000

Account payable = $17,00,000 Inventory = $5,000,000

Long term Bond = $29,000,000 Fixed Assets = $21,000,000

Total = $39,000,000 Total = $39,000,000

Long term Debt = Debt + Bond = $3,900,000 + $29,000,000 = $32,900,000

Long term Debt ratio = $32,900,000/$39,000,000 = 84.36%

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