A payment of a business debt not including interest: Select one: a. Decreases total assets. b....

A payment of a business debt not including interest:

Select one:

a. Decreases total assets.

b. Increases total liabilities.

c. Increases the owners' equity in the business.

d. Decreases the owners' equity in the business.

Expert Solution

A payment of a business debt not including interest:

a. Decreases total assets.

Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets. This metric enables comparisons of leverage to be made across different companies. The higher the ratio, the higher the degree of leverage (DoL) and, consequently, financial risk. The total debt to total assets is a broad ratio that includes long-term and short-term debt (borrowings maturing within one year), as well as all assets – tangible and intangible.

Like all other ratios, the trend of the total debt to total assets should also be evaluated over time. This will help assess whether the company’s financial risk profile is improving or deteriorating. For example, an increasing trend indicates that a business is unwilling or unable to pay down its debt, which could indicate a default at some point in the future.

ekkarill92 answered 1 year ago

Interest payment due to debt can be burdensome to businesses. If interest payment is too high,...

Interest payment due to debt can be burdensome to businesses. If interest payment is too high, it will have a negative impact on earnings before tax. However, interest payment can also reduce tax obligation of a company. Using an example, explain how interest payment on short-term and long-term debt can reduce the amount of taxable income of a company.

Consulting revenue _______ owner's equity. Select one: a) Increases b) Decreases c) None of the above

1. Quick Ratio= current assets-inventories/ current liabilities 2. Debt to Assets ratio= total debt/total assets 3....

1. Quick Ratio= current assets-inventories/ current liabilities 2. Debt to Assets ratio= total debt/total assets 3. Earnings Per Share (EPS)=total earnings/outstanding shares (must first solve net income-preferred divideneds= total earnings) 4. Net Income (Net profit)=total revenues-total expenses I need help finding the answer to these equations for Target Corporation for 2015 and 2016. please refer to the links for the 10k reports for the company. 2015- https://corporate.target.com/_media/TargetCorp/annualreports/2015/pdfs/Target-2015-Annual-Report.pdf 2016- https://corporate.target.com/_media/TargetCorp/annualreports/2016/pdfs/Target-2016-Annual-Report.pdf?ext=.pdf

The debt-to-total assets ratio is primarily a measure of

SOLVENCY RATIOS Debt ratio for Walgreens = Total Liabilities / Total assets Debt ratio for Walgreens...

SOLVENCY RATIOS Debt ratio for Walgreens = Total Liabilities / Total assets Debt ratio for Walgreens 2018 = $68,124 / $68,124 = 1 Debt ratio for Walgreens 2017 = $66,009 / $66,009 = 1 Debt ratio for CVS Debt ratio for CVS 2018 = $196,456 / $196,456 = 1 Debt ratio for CVS 2017 = $95,131 / $95,131 = 1 What do the results of this ratio mean in the context of Walgreens? How about CVS? Compare the two -...

Leverage ratios (Debt / Total assets) EBIT = 2,500,500 0% 25% 50% Total assets $

Leverage ratios (Debt / Total assets) EBIT = 2,500,500 0% 25% 50% Total assets $ 10,000,000 $ 7,500,000 $ 5,000,000 Debt (12%) 0 $ 2,500,000 $ 5,000,000 Equity $ 10,000,000 $ 10,000,000 $ 10,000,000 Total liabilities and equity $ 10,000,000 $ 12,500,000 $ 15,000,000 Expected operating income (EBIT) $ 2,500,000 $ 2,500,000 $ 2,500,000 Less: Interest (@ 12%) 0 $ 300,000 $ 600,000 Earnings before tax $ 2,500,000 $ 2,200,000 $ 1,900,000 Less: Income tax @ 40% $ 1,000,000 $ 880,000 $ 760,000 Earnings after tax $ 1,500,000 $ 1,320,000 $ 1,140,000 Return on equity 15% 13.20% 11.40% Effect of a...

For lump sum payment, an increase of interest rate increases FV and decreases PV. True or...

For lump sum payment, an increase of interest rate increases FV and decreases PV. True or false?

Q1： The total assets and the total liabilities of a business at the beginning and at...

Q1： The total assets and the total liabilities of a business at the beginning and at the end of the year appear below. During the year, the corporation paid cash dividends of $24,000 and the stockholders made an additional investment of $15,000. Assets Liabilities Beginning of year $395,000 $190,000 End of year 555,000 320,000 The amount of net income or net loss for the year was Group of answer choices net income of $54,000. net income of $30,000. net loss...

WFG has total equity of 50,000 and total assets of 90,000. what is the total debt...

WFG has total equity of 50,000 and total assets of 90,000. what is the total debt ratio?

Firm AB and Firm YZ are identical except for their debt-to-total-assets ratios (D/TAs) and interest rates...

Firm AB and Firm YZ are identical except for their debt-to-total-assets ratios (D/TAs) and interest rates on debt. Each has $200,000 in assets, $40,000 EBIT, and a 40 percent marginal tax rate. Firm AB has a D/TA ratio of 40 percent and pays 7.5 percent interest on its debt, whereas YZ has a 60 percent D/TA ratio and pays 10 percent interest on debt. Each firm has 5,000 shares of common stock outstanding. Calculate each firm’s EPS and ROE (ROE...

Question