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%

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.