Question

please use Tables 3.2 and 3.3 in the book on pages 82 and 86 respectively.

Please calculate Hernandez's asst to debt ratio.

Table 3-2 Balance Sheet for a couple with Two Children-Victor and Maria Hernandez, January 1, 2018 ASSETS Monetary Assets 0.3% 1.1% Cash on hand Savings account Victor's checking account Maria's checking account Tax refund due Rent receivable Total Monetary Assets 1,200 4.200 2,700 3,300 700 650 0.7% 0.8% 0.2% 0.2% 3.2% $ 12,750 Tangible Assets Home Personal property Automobiles Total Tangible Assets 192,000 9,000 9.500 $210,500 48.8% 2.3% 2.4% 53.5% Investment Assets 1.1% 1.3% 0.7% Fidelity mutual funds Scudder mutual fund Ford Motor Company stock New York 2038 bonds Life insurance cash value IRA accounts Real estate investment Total Investment Assets Total Assets 4.500 5,000 2,800 4,000 5,400 34.300 114,000 $170,000 $393,250 1.0% 1.4% 8.7% 29.0% 43.2% 100.0% LIABILITIES Short-Term Liabilities Dentist bill due Credit card debt Total Short-Term Liabilities 220 1,600 1,820 0.1% 0.4% 0.5% $ Long-Term Liabilities Vehicle loan Home mortgage loan Total Long-Term Liabilities Total Liabilities Net Worth Total Liabilities and Net Worth 7,700 92,000 $ 99,700 $101,520 $291,730 $393,250 2.0% 23.4% 25.4% 25.8% 74.2% 100.0%

Answer 1

Correct Answer:

Asset to debt ratio

0.258

Working:

short term liabilities	+	long term liabilities	=	total liabilities
$                   1,820.00	+	$           99,700.00		$         1,01,520.00

total liabilities	/	total assets	=	Asset to debt ratio
$         1,01,520.00		$                                 3,93,250.00		0.25815

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks.