Solid State,Inc.has a total equity of $560,000; sales of $2,250,000; total assets of $995,000; and current liabilities of $310,000.What is Solid State's debt ratio?
A) 55.4%
B) 43.7%
C) 31.2%
D) 66.7%

Question

Quizplus · Accepted Answer

Debt ratio = Total debt / Total assets

Total debt = Total assets - Total equity 
Total equity = $560,000
Total assets = $995,000
Total debt = $995,000 - $560,000 = $435,000

Debt ratio = $435,000 / $995,000 = 43.7%