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Basic Question 1 of 3
The total debt ratio is equal to ______.
B. total liabilities divided by stockholders' equity
C. total liabilities divided by total assets
A. long-term debt divided by total capitalization
B. total liabilities divided by stockholders' equity
C. total liabilities divided by total assets
User Contributed Comments 9
| User | Comment |
|---|---|
| kalps | Debt ratio = Total liabilities / Total Assets - shows percentage of all assets financed with debt |
| whoi | debt ratio = total debt ratio ..... |
| DonAnd | Total Debt Ratio = Total Debt / Total Assets |
| aniketcpp | In another word, Toral debt ratio=1/Current ratio |
| johntan1979 | That is wrong aniketcpp Current ratio measures only current liabilities (debt) and current assets. |
| Shaan23 | How is this right? Total debt ratio = Total D / Total A That would mean total d and total Liabilities is the same thing.... |
| leon121 | i don't believe this. total debt is long-term debt plus notes payable and other types of debt. current liabilities should not be included. but ok. |
| ascruggs92 | Unless we are supposed to consider all liabilities debt (which technically they are but from an B/S perspective they aren't) this answer is wrong. It even says in the notes Total Debt over Total Assets, so I don't know what this crap is. |
| dada | The answer is correct, @ascruggs92. The debt ratio is defined as the ratio of total - long-term and short-term - debt to total assets, expressed as a decimal or percentage. From investopedia |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret activity, liquidity, solvency, and profitability ratios
describe relationships among ratios and evaluate a company using ratio analysis
CFA® 2025 Level I Curriculum, Volume 3, Module 11.