Multiple choice

How do you calculate debt ratio?

  1. Total Liabilities x Total Assets

  2. Net Income / Avg. Assets

  3. Net Income / Total Liabilities

  4. Total Liabilities / Total assets

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The debt ratio is calculated by dividing total liabilities by total assets. It measures the proportion of a company's assets that are financed by debt.