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18 March, 11:19

Wiley's has total equity of $679,400, long-term debt of $316,900, net working capital of $31,600, and total assets of $1,123,900. What is the total debt ratio?

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  1. 18 March, 14:08
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    The answer is 0.4

    Explanation:

    The formula for total debt ratio is total debt : total assets.

    Total debt equals current debt plus total long-term debt.

    To find total debt (liability), remember Asset = Liability + Equity.

    Therefore, Liability (debt) will be Asset - equity

    $1,123,900 - $679,400

    Total debt (liability) = $444,500

    So, total debt ratio will be:

    $444,500/$1,123,900

    =0.4

    This ratio means 0.4 or 40 percent of the company asset is financed by debt.
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