At the End of the Current Year, Norman Company Reported

question 144

Multiple Choice

At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

• A) 300%.
• B) 33.3%
• C) 75.0%.
• D) $400,000.
• E) Cannot be determined from the information provideD.On the last year-end, total liabilities were $300,000 and total equity was $100,000. That means total assets were $400,000. Therefore, the debt to assets ratio was $300,000/$400,000 or 75.0%.

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Definitions:

Market Rates

The prevailing interest or exchange rates in the financial markets at any given time.

Premium

The amount paid for an insurance policy or an addition to the standard cost or value of something.

Discount

A deduction from the usual cost of something, or the process of determining the present value of future cash flows by adjusting for the time value of money.

Semiannual Coupon

Interest payments made twice a year by a bond issuer to the bondholders.