Multiple Choice
Which of the following transactions would result in a decrease to the company’s liabilities?
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9. Current Liabilities
Types of Liabilities
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Ricardo has a debt ratio of 92\% and total assets of \$192. Which of the following best represents the amount of Ricardo's total liabilities?
A
$192.00
B
$176.64
C
$17.66
D
$205.00
Verified step by step guidance1
Step 1: Understand the debt ratio formula. The debt ratio is calculated as Total Liabilities divided by Total Assets, expressed as a percentage. Mathematically, it is represented as: .
Step 2: Identify the given values from the problem. Ricardo's debt ratio is 92% (or 0.92 as a decimal), and his total assets are $192.
Step 3: Rearrange the formula to solve for Total Liabilities. Multiply both sides of the equation by Total Assets: .
Step 4: Substitute the given values into the formula. Replace Debt Ratio with 0.92 and Total Assets with $192: .
Step 5: Perform the multiplication to find the Total Liabilities. This will give you the amount of Ricardo's total liabilities.
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