Question

In business, the formula for debt ratio is Debt Ratio = Total Liabilities / Total Assets. A bakery has a total assets of $465 million. Its total liabilities are $130 million. Caculate debt ratio in simplest form.

Answer 1

The formula is given as: Debt Ratio = Total Liabilities / Total Assets.

You are told the assets are 465 million and liabilities is 130 million.

Putting the given numbers in the formula you have:

Debt Ratio =  130/465

Simplify by dividing both numbers by 5:

130/465 = 26/93

Answer 2

Answer:

$\text{Debt ratio}=\frac{26}{93}$

Step-by-step explanation:

We have been given the formula for debt ratio. We are asked to find the debt ratio for  bakery whose total assets are $465 million and total liabilities are $130 million.

$\text{Debt ratio}=\frac{\text{Total liabilities}}{\text{Total assets}}$

Substitute the given values:

$\text{Debt ratio}=\frac{130}{465}$

$\text{Debt ratio}=\frac{26\cdot 5}{93\cdot 5}$

$\text{Debt ratio}=\frac{26}{93}$

Therefore, the required debt ratio in simplest form would be $\frac{26}{93}$.