Final answer:
The Debt Ratio is calculated by dividing Total Liabilities ($1,700) by Total Assets ($3,500), resulting in a ratio of 0.4857 or 48.57%.
Step-by-step explanation:
To calculate the Debt Ratio, you divide Total Liabilities by Total Assets. The formula is:
Debt Ratio = Total Liabilities / Total Assets
Given the values, Total Liabilities = $1,700 and Total Assets = $3,500, the calculation would be:
Debt Ratio = $1,700 / $3,500
Debt Ratio = 0.4857 or 48.57%
The Debt Ratio indicates the proportion of a company's assets that are financed through debt. A higher ratio means a greater degree of leverage and financial risk. In this example, approximately 48.57% of the company's assets are financed by debt, which could be an acceptable level depending on the industry and specific financial practices within that industry.
The Debt Ratio is 0.4857 or 48.57%, showing a moderate level of debt compared to the company's assets.