 Question 1

Please refer to Table 4-1 for the following questions.

Table 4-1
 Stewart Company
 Balance Sheet
Assets:    
Cash and marketable securities   $600,000 
Accounts receivable   900,000 
Inventories     1,500,000 
Prepaid expenses   75,000 
Total current assets   $3,075,000 
Fixed assets  8,000,000  
Less: accum. depr. (2,075,000) 
Net fixed assets   $5,925,000 
Total assets   $9,000,000 
     
Liabilities:    
Accounts payable   $800,000 
Notes payable   700,000 
Accrued taxes   50,000 
Total current liabilities   $1,550,000 
Long-term debt   2,500,000 
Owner's equity (1 million shares of
 
common stock outstanding) 4,950,000 
Total liabilities and owner's equity   $9,000,000 
     
Net sales (all credit)   $10,000,000 
Less: Cost of goods sold   (3,000,000)
Selling and administrative expense   (2,000,000)
Depreciation expense   (250,000)
Interest expense   (200,000)
Earnings before taxes   4,550,000 
Income taxes   (1,820,000)
Net income   $2,730,000 

Based on the information in Table 4-1, the debt ratio is

Selected 45.0%.
Answer:
Answers: 55.2%.
24.1%.
32.6%.
45.0%.