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 Fibonacci's equity is $21 million. Fibonacci's debt ratio is
A) .38.
B) .23.
C) .125.
D) .24.

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. For Fibonacci Property Management, this is $5 million / $13 million = 0.3846, which rounds to .38.

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