The Formula to Compute the Debt Ratio Is

question 29

Multiple Choice

The formula to compute the debt ratio is

• A)interest expense/income from operations.
• B)total liabilities/total assets.
• C)income from operations/interest expense.
• D)total assets/total liabilities.

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Definitions:

Cost Centers

Parts of an organization to which costs can be allocated, but which do not directly generate revenues.

Operating Expenses

Costs incurred during the normal functioning of a business, excluding the cost of goods sold.

Support Departments

Units within an organization that provide essential services to other departments or divisions but do not directly produce revenue.

Profit Center

A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).