On the Balance Sheet of Last Year,a Company Reports Total

question 5

Multiple Choice

On the balance sheet of last year,a company reports total assets of $8 million,common shares (book value) of $4 million,and retained earnings of $2 million.At the end of the current year,the net income was $ 1 million,and the whole amount was retained by the firm.Everything else (each of the aforementioned amounts other than retained earnings) was held constant.The debt-to-assets ratio at the end of the current year is:

• A) 0.25
• B) 0.125
• C) 0.75
• D) 0.5