Peartree Company Provides the Following Data -
What Is Peartree's Debt Ratio at Year-End 2014?
A)

question 102

Multiple Choice

Peartree Company provides the following data:
$\begin{array}{|l|r|r|}\hline \text { BALANCE SHEET } & \text { Dec } 31,2014 & \text { Dec } 31,2013 \\\hline \text { Cash } & \$ 21,000 & \$ 18,000 \\\hline \text { Accounts receivable, net } & 31,000 & 35,000 \\\hline \text { Inventory } & 53,000 & 25,000 \\\hline \text { PP\&E, net } & 120,000 & 90,000 \\\hline \text { Total assets } & \$ 225,000 & \$ 168,000 \\\hline\\\hline \text { Accounts payable } & \$ 4,000 & \$ 6,000 \\\hline \text { Accrued liabilities } & 2,000 & 1,000 \\\hline \text { Long-term notes payable } & 84,000 & 90,000 \\\hline \text { Total liabilities } & \$ 90,000 & \$ 97,000 \\\hline\\\hline \text { Common stock } & \$ 30,000 & \$ 2,000 \\\hline \text { Retained earnings } & 113,000 & 74,000 \\\hline \text { Treasury stock } & (8,000) & (5,000 ) \\\hline \text { Total stockholders' equity } & \$ 135,000 & \$ 71,000 \\\hline \begin{array}{c}\text { Total liabilities and } \\\text { stockholders' equity }\end{array} & \$ 225,000 &\$168,000 \\\hline\end{array}$
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What is Peartree's debt ratio at year-end 2014?

• A) 0.40
• B) 0.67
• C) 4.67
• D) 1.00

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the payer's financial records but not yet cleared or cashed by the recipient.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business.

Monthly Cash Expenses

The total amount of cash payments made by a business within a month to cover its operational expenses and obligations.

Cash On Hand

The total amount of cash or cash equivalents that a business or individual has accessible immediately.