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Carlin Company has total assets of $1,000,000, liabilities of $400,000, and equity of $600,000. What is the debt ratio (rounded to a whole percent)? 250% 167% 60% 40%

Respuesta :

Answer:

40%

Explanation:

Given that,

Carlin Company has;

Total assets = $1,000,000

Liabilities = $400,000

Equity = $600,000

Total debt = $400,000

Therefore,

Debt ratio = Total debt ÷ Total assets

                 = $400,000 ÷ $1,000,000

                 = 0.4 or 40 percent

Hence, the debt ratio of Carlin Company is 40 percent.

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