How Is the Equity Ratio Calculated

question 6

Multiple Choice

How is the equity ratio calculated?

• A) Shareholders' equity/Total assets
• B) Net income/Average equity
• C) Total assets/Shareholders' equity
• D) Average equity/Net income

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Definitions:

Current Liability

Short-term financial obligations that are due within one year or within a normal operating cycle.

Bank Indebtedness

The amount of debt owed to banks by an individual or corporation, typically arising from loans or overdrafts.

Payroll Liabilities

Financial obligations related to employee compensation, including owed wages, salaries, and other benefits, which a company must pay.

CPP Contributions

Payments made into the Canada Pension Plan by workers and employers to fund future retirement, disability, or survivor benefits.