Question
Beth and Pat have been reviewing their financial statements. Using the following information, they have asked you to determine their debt safety ratio and advise
Beth and Pat have been reviewing their financial statements. Using the following information, they have asked you to determine their debt safety ratio and advise them about assuming more debt in the future.
Total Assets | $900,000 |
Total Liabilities |
$400,000 |
Monthly take-home pay | $5,000 |
Monthly credit card payment | $200 |
Monthly car loan payment | $500 |
A. | Beth and Pat have a debt ratio that is very low and would easily be approved for more loans from a bank. | |
B. | Beth and Pat have a debt ratio around the danger range and should wait before considering more debt | |
C. | Beth and Pat should declare bankruptcy | |
D. | It is impossible to tell what they should do based on the facts given. |
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