Bunye Limited has the following balances in the statement of financial position at 31 December 2019.
Based on the below figures, what is the debt ratio?
$\begin{array}{lr}
& £ \
\text { Property, plant and equipment } & 423,000 \
\text { Trade payables } & 88,000 \
\text { Retained earnings } & 186,000 \
\text { Borrowings (all non-current liabilities) } & 150,000 \
\text { Inventory } & 29,000 \
\text { Bank overdraft } & 4,200 \
\text { Trade and other receivables } & 57,500 \
\text { Taxation payable } & 18,800 \
\text { Non-current asset investments } & 22,500 \
\text { Share capital } & 35,000 \
\text { Share premium } & 50,000
\end{array}$

Question

Quizplus · Accepted Answer

The debt ratio is calculated as total liabilities divided by total assets. Total liabilities are £88,000 (trade payables) + £150,000 (borrowings) + £4,200 (bank overdraft) + £18,800 (taxation payable) = £261,000. Total assets are £423,000 (property, plant and equipment) + £29,000 (inventory) + £57,500 (trade and other receivables) + £22,500 (non-current asset investments) = £532,000. Debt ratio = £261,000 / £532,000 = 0.49.

Bunye Limited Has the Following Balances in the Statement of Financial