Karl Company Has Total Assets of $170,000 and Total Liabilities

question 40

Multiple Choice

Karl Company has total assets of $170,000 and total liabilities of $110,000.The company's debt-to-equity ratio is closest to which of the following?

• A) 0.33 to 1.
• B) 0.39 to 1.
• C) 0.65 to 1.
• D) 1.83 to 1.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.

Balance Sheet

A financial statement that displays the company's assets, liabilities, and shareholders' equity at a specific point in time, offering insight into its fiscal health.

Direct Write-Off Method

A method of accounting for bad debts that charges the amount of an outstanding account directly to the expense account at the time it is deemed uncollectable.

Accounting Equation

A fundamental principle of accounting that equates assets with the sum of liabilities and shareholders' equity (Assets = Liabilities + Equity).