Question

6. Picture Perfect Physicians has total assets of $385, 000. Its total liabilities are $100, 000 and its equity is $285, 000. Calculate the debt ratio

Answer 1

The debt ratio is 26%

Explanation:

To get the debt ratio, we have to use the following formula.

debt ratio=total liabilities /total assests

This ratio indicates the percentage of the total asset amounts that is owed to creditors.

debt ratio=total liabilities /total assests

debt ratio=$100, 000 /$385, 000=0.2597 ≅ 26%

Answer 2

To solve this problem you must apply the proccedure shown below:

1- You must use the formula for calculate the debt ratio, which is:

`Dr=(Tl)/(Ta)`

Where
`Tl` is the total liabilities and
`Ta` is the total assets

2- Then, when you substitute the values into the formula, you obtain the following resultt:

`Dr= (100,000dollars)/(385,000dollars)`

`Dr=25.97` %

Therefore, as you can see, the answer is:
`25.97`%