The debt ratio is computed by:

Question

Quizplus · Accepted Answer

The debt ratio is a financial ratio that measures the percentage of a company's assets financed by debt. It is calculated by dividing total liabilities by total assets. Option A is the correct option as it accurately reflects this definition. Option B divides only current liabilities by total assets, which would not provide a complete picture of a company's debt. Option C is the inverse of the debt ratio formula and would not provide meaningful information. Option D divides total assets by total liabilities, which would yield a different ratio than the debt ratio.

The Debt Ratio Is Computed By