Question

The debt ratio is calculated by​ dividing: A. total debt by total assets. B. total assets...

The debt ratio is calculated by​ dividing:

A.

total debt by total assets.

B.

total assets by​ long-term liabilities.

C.

​long-term liabilities by total assets.

D.

total assets by total debt.

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Answer #1

Correct answer-------------(A) Total debt by total assets.

.

Debt ratio is calculated by dividing Total debts(short term and long term liabilities of whatever nature) with total assets.

The business;s total liabilities are shown as a percentage of total asset which tells how much of the assets are financed by liability. This is one of the solvency ratios.

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