Gi Gi's Bakery Has Total Assets of $425 Million

question 161

Multiple Choice

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

• A)38.6%.
• B)13.4%.
• C)34.9%.
• D)25.9%.
• E)14.9%.

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Definitions:

Net Book Value

The value of an asset as recorded on the balance sheet, calculated as the original cost minus accumulated depreciation and impairments.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in an equal annual amount.

Depreciable Cost

The cost of a fixed asset minus its salvage value, which is the total amount that can be depreciated over its useful life.

Initial Cost

The amount of money spent to acquire or start up an asset or investment, excluding any subsequent costs for maintenance or operation.