What is the approximate maximum amount Apex can borrow and not exceed a debt ratio of .3?
A) $4,000,000.
B) $5,500,000.
C) $5,000,000.
D) $600,000.

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total debt divided by total assets. To find the maximum amount Apex can borrow without exceeding a debt ratio of 0.3, we need to know the total assets. Assuming total assets are $18,333,333 (since $5,500,000 is 30% of this amount), borrowing $5,500,000 would result in a debt ratio of 0.3.

What Is the Approximate Maximum Amount Apex Can Borrow and Not