Mitchell Florists had the following total assets, liabilities, and equity as of December 31. $$\begin{array} { | l | r | }
\hline \text { Assets } & \$ 450,000 \
\hline \text { Liabilities } & 135,000 \
\hline \text { Equity } & 315,000 \
\hline
\end{array}$$ What is Mitchell's debt ratio as of December 31?

Question

Mitchell Florists had the following total assets, liabilities, and equity as of December 31. $$\begin{array} { | l | r | } 
\hline \text { Assets } & \$ 450,000 \
\hline \text { Liabilities } & 135,000 \
\hline \text { Equity } & 315,000 \
\hline
\end{array}$$ What is Mitchell's debt ratio as of December 31?

Quizplus · Accepted Answer

The debt ratio is calculated as Liabilities divided by Assets. Here, it is $135,000 / $450,000 = 0.30 or 30%.

Mitchell Florists Had the Following Total Assets, Liabilities, and Equity