Flanders Company Has Total Assets of $360,000 and Total Liabilities

question 83

Multiple Choice

Flanders Company has total assets of $360,000 and total liabilities of $300,000.The company collects an account receivable of $20,000.After this transaction,the company's debt ratio will be:

• A)0.56.
• B)0.83.
• C)1.80.
• D)1.90.

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Definitions:

Stockholders' Equity

Ownership interest reflected by what is left of a company's assets once liabilities have been deducted.

Account Payable

Liabilities or amounts owed by a business to its creditors or suppliers for goods and services received but not yet paid for.

Liabilities

Financial obligations or debts that a company owes to others, which are due to be paid in the future.

Total Assets

The sum of all assets owned by a company, including both current and non-current assets, representing the total resources the company has at its disposal.