A company reports total assets of $920,000 and stockholders' equity of $540,000.Calculate the debt ratio.(Round your answer to two decimal places.)
A) 36.99%
B) 41.30%
C) 58.70%
D) 70.37%

Question

Quizplus · Accepted Answer

Debt ratio is calculated by dividing total liabilities by total assets. 
Total liabilities = Total assets – Stockholders' Equity = $920,000 - $540,000 = $380,000 
Debt Ratio = Total Liabilities/Total Assets = $380,000/$920,000 = 0.413 or 41.30%.

Therefore, the best choice is B) 41.30%.

A Company Reports Total Assets of $920,000 and Stockholders' Equity