The debt to assets ratio is computed by dividing

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The debt to assets ratio is a measure of a company's leverage, and it indicates the percentage of the company's assets that are financed by debt. To compute this ratio, total liabilities are divided by total assets. This gives an indication of the proportion of the company's assets that are financed by debt, which can be an important consideration for lenders, investors, and other stakeholders. Long-term liabilities only represent a portion of the company's total liabilities, so dividing long-term liabilities by total assets (choice A) would not provide an accurate measure of the company's leverage. Dividing total assets by total liabilities (choice C) would provide a different ratio, known as the asset to debt ratio. Dividing total assets by long-term liabilities (choice D) would provide an indication of the company's ability to meet its long-term debt obligations, but it would not provide a complete picture of the company's leverage.

The Debt to Assets Ratio Is Computed by Dividing