Asked by Aubrey Hadley on Jun 18, 2024
Verified
The debt to total assets ratio is calculated by dividing
A) non-current liabilities by total assets.
B) non-current liabilities by average assets.
C) total liabilities by total assets.
D) total liabilities by average assets.
Total Assets
The sum of all assets owned by an entity, representing the total resources at its disposal.
Total Liabilities
The cumulative amount of all debts and financial obligations a company owes to outside parties.
Liabilities
Financial obligations or debts owed by a business to creditors, which are expected to be settled through the transfer of assets or provision of services.
- Absorb the essence of financial ratios and understand the procedures for their determination.
- Comprehend the debt to total assets ratio for evaluating a company's solvency.
Verified Answer
KC
Kelli CarrollJun 25, 2024
Final Answer :
C
Explanation :
The debt to total assets ratio is calculated by dividing total liabilities by total assets, which measures the percentage of a company's assets that are financed by debt.
Learning Objectives
- Absorb the essence of financial ratios and understand the procedures for their determination.
- Comprehend the debt to total assets ratio for evaluating a company's solvency.