Given:
Working capital = 180,000
debt-to-asset ratio = 40%
Working capital = Current assets - current liabilities
debt-to-asset ratio = total liabilities / total assets
I found a similar problem but it has an accompanying balance sheet.
Total current liabilities = 75,000
Total long term assets = 420,000
Current Assets = Working capital + current liabilities
Current assets = 180,000 + 75,000
Current assets = 255,000
Total Assets = Current Assets + Long term Assets
Total Assets = 255,000 + 420,000
Total Assets = 675,000
debt-to-assets ratio = total liabilities / total assets
40% = total liabilities / 675,000
total liabilities = 675,000 x 40%
total liabilities = 270,000
Asset = Liabilities + Equity
Equity = Assets - Liabilities
Equity = 675,000 - 270,000
Equity = 405,000
