Pavillion Corp. has $6,000,000 in total assets, $1,500,000 in current
Pavillion Corp. has $6,000,000 in total assets, $1,500,000 in current assets, and $4,000,000 in equity. Calculate the debt-to-asset ratio.
A) 0.33
B) 0.50
C) 0.25
D) 0.67
ANSWER
A
Explanation: A) D/A = (T/A – Equity)/T/A = ($6,000,000 – $4,000,000)/$6,000,000 = 0.33.
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