A Company Had Total Assets of $350,000, Total Liabilities of $101,500

question 96

Essay

A company had total assets of $350,000, total liabilities of $101,500 and total equity of
$248,500. Calculate the company's debt ratio.

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Definitions:

Novation

The act of replacing an old contract with a new one, substituting a new party into an existing agreement.

Mortgage

A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property, with a clause for voiding the agreement upon repayment.

Discharged

In legal terms, released or freed from an obligation, duty, or liability.

Incidental Beneficiary

A third party who may benefit from a contract between two other parties, albeit unintentionally and without the legal right to enforce the contract terms.