Answer:
Paper Clip's Debt ratio is 0.25 or 25%
Explanation:
To calculate Debt ratio we need to find the value of Assets.
Asset turnover = Net sales / Total Assets
3 = $24,000,000 / Total Assets
Total Assets = $24,000,000 / 3
Total Assets = $8,000,000
Assuming that the only Liability is $2,000,000 on which the interest been paid.
Debt ratio = Total Debt / Total Equity
Debt ratio = 2,000,000 / 8,000,000
Debt ratio = 0.25 = 25%
