Question

Mitchell Florists reported assets of $1,400 and equity of $350. What is its debt ratio? (Round your percentage answer to two decimal places.)

Answer 1

Debt ratio = 3 : 1

Step-by-step explanation:

Asset = Capital

Capital = Debt + Equity

I.e Asset = Debt + Equity

1400 = D + 350

D = 1050

Debt ratio = Debt / Equity

Debt ratio = 1050/350

Debt ratio = 3 : 1