Question

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

Answer 1

`\text{Debt ratio}=(26)/(93)`

Explanation:

We have been given the formula for debt ratio. We are asked to find the debt ratio for bakery whose total assets are $465 million and total liabilities are $130 million.

`\text{Debt ratio}=\frac{\text{Total liabilities}}{\text{Total assets}}`

Substitute the given values:

`\text{Debt ratio}=(130)/(465)`

`\text{Debt ratio}=(26\cdot 5)/(93\cdot 5)`

`\text{Debt ratio}=(26)/(93)`

Therefore, the required debt ratio in simplest form would be
`(26)/(93)`.

Answer 2

The formula is given as: Debt Ratio = Total Liabilities / Total Assets.

You are told the assets are 465 million and liabilities is 130 million.

Putting the given numbers in the formula you have:

Debt Ratio = 130/465

Simplify by dividing both numbers by 5:

130/465 = 26/93