A firm has a total debt ratio of .47. This means that that firm has 47 cents in debt for every:
A) $1.00 in equity.
B) $1.00 in total sales.
C) $1.00 in current assets.
D) $0.53 in equity.
E) $0.53 in total assets.

Question

Quizplus · Accepted Answer

The total debt ratio is calculated as total debt divided by total assets. A ratio of .47 means that for every $1 in total assets, the firm has $0.47 in debt, leaving $0.53 in equity for every $1 in total assets.

A Firm Has a Total Debt Ratio of