At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:
A) 300%.
B) 33.3%
C) 75.0%.
D) $400,000.
E) Cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. Given total liabilities of $300,000 and total equity of $100,000, total assets would be $400,000 ($300,000 + $100,000). Thus, the debt ratio is $300,000 / $400,000 = 0.75 or 75%.

At the End of the Current Year, Norman Company Reported