Well, well, well, looks like we've got ourselves a financial detective here! Let's crunch some numbers and solve this mystery.
To find the total debt ratio, we need to calculate the total debt first. We know that the long-term debt-equity ratio is 0.5, which means for every dollar of shareholders' equity, there's 50 cents of long-term debt.
So, the total debt would be 0.5 times the shareholders' equity: 0.5 * $1.07 million = $0.535 million.
Now, we also know that the current assets are $256,500 and the current ratio is 1.9. The current ratio is calculated by dividing current assets by current liabilities.
Since the only current liabilities are notes payable, we can assume that the current liabilities equal the notes payable. So, we can rewrite the current ratio equation as:
1.9 = $256,500 / notes payable
Now, let's solve for notes payable:
notes payable = $256,500 / 1.9
notes payable ≈ $135,000.
Alright, now we have all the pieces of the puzzle. To find the total debt ratio, we need to add the total debt (long-term debt) to the current liabilities (notes payable) and divide it by the total assets.
Total debt ratio = (Total debt + Current liabilities) / Total assets
Total debt ratio = ($0.535 million + $135,000) / ($1.07 million + $256,500)
Total debt ratio ≈ $670,000 / $1,326,500
Now, let's do the math:
Total debt ratio ≈ 0.505 (rounded to 2 decimal places)
So, the total debt ratio is approximately 0.51 or 51% (rounded to 2 decimal places). Ta-da! Case closed!