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In business, the formula for debt ratio is Debt Ratio = Total Liabilities/Total Assets. A bakery has total assets of $465 million. Its total liabilities are $130 million. Calculate the debt ratio in simplest form.

User Jytug
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1 Answer

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We will solve this problem in terms of millions.


The bakery's total assets is 465 million. The total liabilties are 130 million. Plug these values into the debt ratio equation:



\frac{\text{Total liabilities}}{\text{Total assets}}



(130)/(465)


We can simplify this fraction by dividing both the numerator and denominator by 5:



(130)/(465) / (5)/(5) = \boxed{(26)/(93)}


We cannot simplify this fraction any further, as the only common factor between 26 and 93 is 1.


If you want the debt ratio as a percentage, then divide the numerator by the denominator:



26 / 93 = 0.2796


Multiply the decimal by 100 to convert into a percentage:



0.2796 * 100 = \boxed{27.96}


The debt ratio is 26/93, or 27.96%.

User Amir Sherafatian
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