Ratio of liabilities to total assets is computed by:

Question

Quizplus · Accepted Answer

The ratio of liabilities to total assets is calculated by dividing total liabilities by total assets. This ratio considers the proportion of the total assets that are financed through debt, and it indicates the company's solvency and creditworthiness. A higher ratio of liabilities to total assets implies that the company has more debt than assets, which may increase its financial risk and affect its ability to meet its financial obligations.

Ratio of Liabilities to Total Assets Is Computed By