A Company Has Total Liabilities of $550 Million and Total

question 69

Multiple Choice

A company has total liabilities of $550 million and total equity of $300 million.Calculate this company's debt ratio.

• A)64.7%
• B)100%
• C)54.5%
• D)1.83 to 1
• E)The debt ratio cannot be determined without additional information.

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Definitions:

Adam Smith

A Scottish economist and philosopher known as the "father of economics" and the author of "The Wealth of Nations," which laid the foundation for classical economics.

Entrepreneur

A person who establishes, arranges, and manages one or more businesses, assuming higher-than-usual financial risks to achieve this.

"Invisible Hand"

A metaphor introduced by Adam Smith to describe how individual self-interest and competition can lead to social and economic benefits.

Price Mechanism

The manner in which the prices of goods or services affect the supply and demand of those goods or services, and how this interaction determines the allocation of resources.