Question

Lucky Laundry reported assets of $950 and equity of $580. What is Lucky's debt ratio?

Answer 1

Answer:

0.3894

Explanation:

Debt Ratio = Total Debts/Total Assets

We will find the amount of Debt since amount of total assets is given

Assets = Liabilities + Equity

$950   = L + $580

L = $950 - $580

L = $370

Now lets find the Debt ratio

Debt Ratio = Total Debts/Total Assets

                  = $370/$950

                  = 0.3894