Answer:
Debt ratio = 0.76
Explanation:
The debt ratio is known as total debt to total asset ratio. The debt ratio suggests that the percentage of assets has been employed with the liabilities. It can be calculated as total debt divided by the total assets.
Formula:
Debt ratio = [tex]\frac{Total debt}{total assets}[/tex]
Given,
Total debt = $86,000
Total assets = $113,000
Putting the value in the formula,
Debt ratio = $86,000 ÷ $113,000
Debt ratio = 0.76
76% of total assets has been employed through the liabilities.
