Fibonacci Property Management's balance sheet shows total liabilities of $5 million and total assets of $13 million.Interest bearing liabilities total $3 million (book value).The market value of Fibonnacci's equity is $21 million.What is Fibonacci's debt ratio?
A).38
B).23
C).125
D).24

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. Here, total liabilities are $5 million and total assets are $13 million. So, the debt ratio is $5 million / $13 million = 0.38 or 38%.

Fibonacci Property Management's Balance Sheet Shows Total Liabilities of $5