Denton, Inc. has total equity of $389,600, long-term debt of $116,400, net working capital of $1,600, and total assets of $527,600. What is the total debt ratio?
A) 0.22
B) 0.26
C) 0.67
D) 1.49
E) 3.85

Question

Quizplus · Accepted Answer

Total debt ratio is calculated by dividing total debt (long-term debt) by total assets.

Total debt = $116,400
Total assets = $527,600

Total debt ratio = $116,400 / $527,600 = 0.22 or 22%

Therefore, the best choice is B.