Question

Jorge's assets and liabilities are listed below. Use this data to answer

Cash:$1000
Clothes and furnishings: $2,500
Investments: $30,000
Credit card bills: $500
Student loan : $12,000
What is Jorge's debt ratio?
a) 0.36.
b) 0.37.
c) 0.38.
d) 0.40.

Answer 1

Jorge's debt ratio can be calculated by dividing his total liabilities by his total assets. His debt ratio is 0.37.

Step-by-step explanation:

Jorge's debt ratio can be calculated by dividing his total liabilities by his total assets. His total liabilities are the sum of his credit card bills and student loan, which is $12,500. His total assets are the sum of his cash, clothes and furnishings, and investments, which is $33,500. Therefore, the debt ratio is 12,500/33,500 = 0.373.

So, the correct answer is 0.37.