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12 February, 11:14

Carlin Company has total assets of $1,000,000, liabilities of $400,000, and equity of $600,000. What is the debt ratio (rounded to a whole percent) ? 250% 167% 60% 40%

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  1. 12 February, 12:22
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    40%

    Explanation:

    Given that,

    Carlin Company has;

    Total assets = $1,000,000

    Liabilities = $400,000

    Equity = $600,000

    Total debt = $400,000

    Therefore,

    Debt ratio = Total debt : Total assets

    = $400,000 : $1,000,000

    = 0.4 or 40 percent

    Hence, the debt ratio of Carlin Company is 40 percent.
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