Is the firm heavily in debt? Does it have assets to pay for expenses
and to finance the development of new products and information systems?
The firm isn't heavily in debt because the amount of the debt over the total amount of the assets doesn't access 50%. The ratio debt to total assets can measure the debt conditions of the company. This means the firm has 50% and above assets to fund other development and investment. Thus, the firm has enough assets to pay for expenses and to finance the development of new product and information systems. The table in the below shows the ratio of debt to total assets:
|
YEAR |
Total Asset |
Total debts |
Debt to total assets (%) |
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2002 |
59,442 |
25136 |
42 |
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2003 |
62,527 |
27414 |
44 |
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2004 |
65,077 |
29592 |
45 |
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*Debt to total assets =
total debts/total assets*100 |
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(Taken
from http://wps.prenhall.com/bp_laudon_mis_9/0,10571,2101577-,00.html) |
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