Identify the correct formula below used to calculate the debt ratio.
A) Total Liabilities/Total Assets.
B) Total Equity/Total Assets.
C) Total Assets/Total Liabilities.
D) Total Equity/Total Liabilities.
E) Total Liabilities/Total Equity.

Question

Quizplus · Accepted Answer

The debt ratio is calculated by dividing total liabilities by total assets. This measures the proportion of a company's assets that are financed through debt, and is a key indicator of a company's risk level. Option A correctly provides this formula.

Identify the Correct Formula Below Used to Calculate the Debt