A total debt ratio of 0.35:
A)Indicates that the firm is financed with 35 percent long-term debt
B)Would exist if a firm had liabilities of $700 and assets of $2,000
C)Indicates that 35 cents of every dollar of capital is in the form of short-term debt
D)Indicates that 35 cents of every dollar of capital is in the form of long-term debt

Question

Quizplus · Accepted Answer

The total debt ratio is calculated as total liabilities divided by total assets. If a firm has liabilities of $700 and assets of $2,000, the total debt ratio would be $700/$2,000 = 0.35.

A Total Debt Ratio of 0.35