If a firm financed half its assets with debt and half with owners' equity, its debt ratio would be _____.
A) 25%
B) 33.33%
C) 50%
D) 56.50%

Question

Quizplus · Accepted Answer

The debt ratio is the proportion of a company's assets that are financed by debt. It is calculated by dividing the total liabilities (debt) by the total assets. In this case, half of the assets are financed by debt and the other half by owner's equity, so the debt ratio would be 50%.

If a Firm Financed Half Its Assets with Debt and Half