A firm has a total debt ratio of .47.This means that,that firm has 47 cents in debt for every:
A)$.53 in equity.
B)$.53 in total assets.
C)$1 in current assets.
D)$.1 in equity.
E)$1 in total sales.

Question

Quizplus · Accepted Answer

The total debt ratio is calculated as Total Debt / Total Assets. A total debt ratio of 0.47 means that 47% of the firm's assets are financed by debt, leaving 53% financed by equity. Thus, for every $0.53 in equity, there is $0.47 in debt.

A Firm Has a Total Debt Ratio of