How to calculate the company debt to assets ratio

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Sandhill Co. has $1,040,000 in assets and $1,040,000 in stockholders' equity, with 35,500 shares outstanding the entire year. It has a return on assets of 10%. During 2021, it had net income of $104,000. On January 1, 2022, it issued $437,000 in debt at 6% and immediately repurchased 17,750 shares for $437,000. Management expected that, had it not issued the debt, it would have had net income of $104,000 in 2022. Assume the company pays dividends on common stock equal to its net income each year. Also, assume the accrued interest on the debt was paid at December 31, 2022 and the company has no other debt outstanding at year-end.

Question 1: How to calculate the company's debt to assets ratio for 2021 and 2022

Reference no: EM132555811

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