Calculate the debt ratio from the following information. Land and building = $500,000
Machinery = $300,000
Cash in hand = $400,000
Total debts = $300,000
A) 3:4
B) 1:4
C) 2:3
D) 2:2
E) 1:3

Question

Quizplus · Accepted Answer

Debt ratio = Total debts / Total assetsTotal assets = Land and building + Machinery + Cash in handTotal assets = $500,000 + $300,000 + $400,000Total assets = $1,200,000Debt ratio = $300,000 / $1,200,000Debt ratio = 1:4

Calculate the Debt Ratio from the Following Information