Chapter 8, Problem 8.10.4MBA

To determine

Concept Introduction:

Debt Ratio:

Debt ratio is the relationship between the Total liabilities and Total Assets of a corporation. Debt ratio shows the part of assets financed by debts. It is calculated by dividing total liabilities by total assets. The formula of debt ratio is as follows:

  $\text{Debt Ratio = }\frac{\text{Total Liabilities}}{\text{Total Assets}}$

To Indicate:

If the company is primarily finance with liabilities or equity