Answer:
The firm's debt ratio is 0.3758
Explanation:
The formula to compute the firm debt ratio is shown below:
Debt ratio = Total liabilities ÷ Total assets
where,
Total liabilities = Total liabilities and equity - common stock - retained earning
= $6,200,000 - $680,000 - $3,190,000
= $2,330,000
And, the total assets are $6,200,000
Now put these values to the above formula
So, the answer would be equal to
= $2,330,000 ÷ $6,200,000
= 0.3758
