The debt ratio is computed as:
A) net income divided by interest expense.
B) total liabilities divided by total assets.
C) total bonds payable divided by total stockholders' equity.
D) fixed assets divided by long-term liabilities.

Question

Quizplus · Accepted Answer

The debt ratio measures the proportion of a firm's assets that are financed with debt, so it is calculated as total liabilities divided by total assets. Choice A relates to the interest coverage ratio, choice C relates to the debt-to-equity ratio, and choice D relates to the debt-to-total-assets ratio.

The Debt Ratio Is Computed As