The debt to assets ratio is computed by dividing
A) long-term liabilities by total assets.
B) total liabilities by total assets.
C) total assets by total liabilities.
D) total assets by long-term liabilities.

Question

Quizplus · Accepted Answer

The debt to assets ratio is a financial ratio used to evaluate a company's leverage, and it represents the proportion of a company's assets that are financed by debt. The ratio is computed by dividing total liabilities by total assets, which gives an indication of how much of the company's assets have been financed by debt. Therefore, choice B (total liabilities by total assets) is the correct answer.

The Debt to Assets Ratio Is Computed by Dividing