The debt to total assets ratio will go up if an equal amount of assets and liabilities are added to the balance sheet.

Question

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The debt to total assets ratio is calculated by dividing total debt by total assets. If an equal amount of assets and liabilities are added to the balance sheet, the total assets and total liabilities will both increase by the same amount. Therefore, the ratio of total debt to total assets will increase, leading to a higher debt to total assets ratio.

The Debt to Total Assets Ratio Will Go Up If