An analyst gathers the following information (in millions) about a company:
Total assets: 400
Total liabilities: 200
Total debt: 100
Total equity: 200
The total debt ratio is: | Chartered Financial Analyst Level 1 Quiz - LeetQuiz
Chartered Financial Analyst Level 1
Explanation:
The correct answer is A (0.25). The total debt ratio is calculated as total debt divided by total assets, which is 100 / 400 = 0.25.
Option B (0.50) is incorrect because it calculates the debt-to-equity ratio (total debt / total equity = 100 / 200 = 0.50) or mistakenly uses total liabilities divided by total assets (200 / 400 = 0.50).
Option C (2.00) is incorrect because it calculates the financial leverage ratio (total assets / total equity = 400 / 200 = 2.00).
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An analyst gathers the following information (in millions) about a company:
Total assets: 400
Total liabilities: 200
Total debt: 100
Total equity: 200
The total debt ratio is:
