Question

Merv’s Magic Shop has $56,000.00 in assets and $14,000.00 in liabilities. Merv’s current financial ratio is

2:1.

3:1.

4:1.

5:1.

Answer 1

4:1.

56,000÷2 = 28,000

14,000÷2 = 7,000

28,000/7,000 = 28/7

28 ÷ 7 = 4
---- -----
7 ÷7 = 1

4:1

Hope this helps!

Answer 2

4:1

Explanation:

The financial ratio for Merv is the ratio of assets to liabilities. This can be determined by dividing the value of the assets and the liabilities:

`56000/14000=4`

Therefore for everything $4 of assets there is $1 of liabilities. The ratio is 4:1.