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View Full Version : How do you figure out debt ration?


krtne
May 24, 2013, 05:41 PM
Total sales 200 million
Assets 100 million
Return equity 30%
Net profit margin 7.5%

What is the formula to figure out debt ratio?

ArcSine
May 25, 2013, 04:40 AM
From Sales and Net Profit Margin you can derive Net Income.

From Net Income and Return on Equity you can derive amount of Equity.

From Equity and Assets you can determine Debt.

From Debt and Equity comes your desired ratio.