The debt ratio is calculated as total debts over total assets. All debts are included, even those
payable over more than one year. The bank overdraft must not be netted off against the cash at bank and in hand balance.
Purple’s debt ratio = (1,500 + 34,340 + 50,000 + 5,700)/(133,750 + 15,800 + 27,400 +
17,430 + 3,200) = 91,540/197,580 = 46.3% |
