SOLVENCY RATIOS

Debt to Asset Ratio

Debt to Asset Ratio = Total Liabilities ÷ Total Assets

      2017 2018 2019 2020 2021

Total ₱ ₱11,476,079.0 ₱10,095,400.3 ₱ ₱

Liabilities 12,848,293.22 4 9 8,754,436.82 7,374,999.63

₱

Total ₱ ₱27,624,906.1 ₱28,696,480.0 30,068,366.5 ₱

Assets 26,747,801.29 3 9 2 31,600,014.71

Ratio   48.03% 41.54% 35.18% 29.12% 23.34%

The debt to assets ratio indicates the proportion of a company's assets that are

being financed with debt, rather than equity. The ratio is used to determine the

financial risk of a business. A ratio greater than 1 shows that a considerable

proportion of assets are being funded with debt, while a low ratio indicates that the

bulk of asset funding is coming from equity.

The table above shows that debt-to-asset ratio decreases over the years as the

partnership pays back its long term debts. By 2021, the debt is almost paid since

only 23.34% of the assets are apportioned to the firm’s debts, with the remaining

percentage to be distributed to the owners.

Equity to Assets Ratio

Equity to Assets Ratio = Total Equity ÷ Total Assets

      2017 2018 2019 2020 2021

Total ₱ ₱16,148,827.0 ₱18,601,079.7 ₱ ₱

Equity   13,899,508.07 9 0 21,313,929.70 24,225,015.08

Total ₱ ₱27,624,906.1 ₱28,696,480.0 ₱ ₱

Assets 26,747,801.29 3 9 30,068,366.52 31,600,014.71

Ratio   51.97% 58.46% 64.82% 70.88% 76.66%

 The Equity- to- Assets ratio is used to measure the amount of capital contributed by the owners

to the firm. This shows how much the partners are contributing to the firm each year to meet its

operations. Equity to Assets ratio is affected by the debt to asset ratio since capital may be from

creditors and the owners. This ratio determines what percentage of the company's assets are

owned by investors and not leveraged and therefore could come under the control of debtholders

(such as banks) in the event of bankruptcy. The higher the equity-to-asset ratio, the less

leveraged the company is, meaning that a larger percentage of its assets are owned by the

company and its investors.

It can be seen that at the beginning, the assets is divide almost equally to both creditors and the

partners. However, as time progresses and long-term debts are paid, the owners are slowly

regaining the majority of the capital of the firm shown in the equity to assets ratio in year 2021

where the owners cover 76.66% of the assets.