To determine the total assets given the debt-to-asset ratio, we start with the debt-to-asset ratio formula, which is calculated by dividing total liabilities by total assets.
We have the following information:
- Total liabilities: 16,250
- Debt-to-asset ratio: 9%
To convert the percentage to a decimal, we divide by 100:
[tex]\[ \text{ratio} = \frac{9}{100} = 0.09 \][/tex]
The debt-to-asset ratio formula is:
[tex]\[ \text{Debt-to-asset ratio} = \frac{\text{Total liabilities}}{\text{Total assets}} \][/tex]
Using the given values:
[tex]\[ 0.09 = \frac{16,250}{\text{Total assets}} \][/tex]
We can rearrange this equation to solve for total assets:
[tex]\[ \text{Total assets} = \frac{16,250}{0.09} = 180,555.56 \][/tex]
So, the total assets amount to 180,555.56.
### Reflecting on the Balance Sheet and Balance Sheet Equation
1. The balance sheet provides a snapshot of a company’s financial condition at a specific point in time, detailing assets, liabilities, and equity, all of which balance out according to the accounting equation: Assets = Liabilities + Equity.
2. By verifying transactions using the balance sheet equation and calculating the debt-to-asset ratio, I learned how each financial transaction affects the overall financial health of a company, illustrating the interconnectedness of financial metrics and the importance of accurate financial reporting.
