Question

Total liabilities - Total assets represents which type of financial rato?

A. Current ratio
B. Retuin on equity
C. Debt ratio
D. Debt to equity ratio

Answer 1

C. Debt ratio

Step-by-step explanation:

Debt ratio is calculated by dividing total liabilities with the total assets. The debt ratio show how high the leverage of a business. A higher debt ratio also means the business will have a higher risk of default to pay their loans.

The current ratio is calculated by dividing current assets with the current liability . There is no mention of equity in the question, so option B and D definitely wrong.