Questions: 13 of 15 Concepts completed (i) Multiple Choice Question Given the following information for Jackson's Boots, calculate its Debt Ratio for the current year. in Thousands Current Year Total assets 250 Total liabilities 100 Total equity 150 .40 .66 2.50

13 of 15 Concepts completed (i) Multiple Choice Question Given the following information for Jackson's Boots, calculate its Debt Ratio for the current year. in Thousands Current Year Total assets 250 Total liabilities 100 Total equity 150 .40 .66 2.50
Transcript text: 13 of 15 Concepts completed (i) Multiple Choice Question Given the following information for Jackson's Boots, calculate its Debt Ratio for the current year. \begin{tabular}{|l|l|} \hline$\$$ in Thousands & \begin{tabular}{l} Current \\ Year \end{tabular} \\ \hline Total assets & $\$ 250$ \\ \hline Total liabilities & $\$ 100$ \\ \hline Total equity & $\$ 150$ \\ \hline \end{tabular} .40 .66 2.50
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Solution

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Answer

The answer is 0.40

Explanation

The Debt Ratio is calculated by dividing Total Liabilities by Total Assets.

Option 1: 0.40

Debt Ratio = Total Liabilities / Total Assets Debt Ratio = \$100,000 / \$250,000 Debt Ratio = 0.40

Option 2: 0.66

This option is incorrect because it does not match the calculation of the Debt Ratio based on the given figures.

Option 3: 2.50

This option is also incorrect because it significantly overestimates the Debt Ratio based on the given figures.

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