QUESTION 11 Use the following selected financial data to cal

QUESTION 11 Use the following selected financial data to calculate the debt ratio for RQP Company. You may use Appendix A of the textbook to locate the formulas, pgs.269-271 Net sales$800,000 Cost of goods sold 500,000 Operating expenses 100,000 Net income 120,000 Total assets 640,000 Total liabilities 462,000 80.0% ? 62.5% O25.9% ? 72.2%

Solution

Debt ratio = (Total Liabilities divided by Total Assets ) x 100

Debt ratio = ($ 462,000 / $ 640,000) x 100
= 72.1875%, which when rounded off, becomes 72.2%

Hence, the correct answer is Option 4th: 72.2%