If Morgan Trading Pty Ltd has the following balance sheet figures the debt ratio is:
$$\begin{array} { l l }
& \text {\$ } \
\text { Current assets } & 500000 \
\text { Current liabilities } & 150000 \
\text { Non-current assets } & 20000 \
\text { Noncurrent liabilities } & 50000
\end{array}$$
A)71.4%
B)40%
C)30%
D)28.6%

Question

If Morgan Trading Pty Ltd has the following balance sheet figures the debt ratio is:
$$\begin{array} { l l }
& \text {\$  }  \
\text { Current assets } & 500000 \
\text { Current liabilities } & 150000 \
\text { Non-current assets } & 20000 \
\text { Noncurrent liabilities } & 50000
\end{array}$$
A)71.4%
B)40%
C)30%
D)28.6%

Quizplus · Accepted Answer

Debt ratio = $\frac{Total\ Liabilities}{Total\ Assets}$ 
Total Liabilities = Current Liabilities + Noncurrent Liabilities = 150000 + 50000 = $200000$ 
Total Assets = Current Assets + Noncurrent Assets = 500000 + 20000 = $520000$

Therefore, Debt Ratio = $\frac{200000}{520000}$ x 100% =  38.46%  
The closest option is D) 28.6%

If Morgan Trading Pty Ltd Has the Following Balance Sheet