A balance sheet balances assets with their sources of debt and equity financing.  If a corporation has assets equal to $ 4 comma 400 comma 000
 
and a debt ratio of 74
​%, 
how much debt does the corporation have on its​ books?
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Part 1
The amount of debt the corporation has on its books is ​$enter your response here
. 
 ​(Round to the nearest​ dollar.)

To determine the amount of debt the corporation has on its books, we use the debt ratio formula:

\[
\text{Debt Ratio} = \frac{\text{Total Debt}}{\text{Total Assets}}
\]

Rearranging the formula to find the total debt:

\[
\text{Total Debt} = \text{Debt Ratio} \times \text{Total Assets}
\]

We are given:
- Total assets = $4,400,000
- Debt ratio = 74% = 0.74

Now we can calculate the total debt:

\[
\text{Total Debt} = 0.74 \times 4,400,000
\]

\[
\text{Total Debt} = 3,256,000
\]

Thus, the corporation has **$3,256,000** of debt on its books.

Would you like more details or have any questions?

Here are five related questions:
1. How is the equity amount calculated given the debt ratio?
2. What happens to the debt amount if the debt ratio decreases to 60%?
3. Can a debt ratio exceed 100%, and what would that imply?
4. How is the debt-to-equity ratio different from the debt ratio?
5. What is the significance of the debt ratio in financial analysis?

**Tip:** A high debt ratio often indicates a company is heavily leveraged, which can increase risk if the company faces financial difficulties.

A balance sheet balances assets with their sources of debt and equity financing. If a corporation has assets equal to $4,400,000 and a debt ratio of 74%, how much debt does the corporation have on its books?

Learn how to calculate the debt of a corporation with assets of $4,400,000 and a debt ratio of 74%. This problem covers key financial and algebraic concepts, including the debt ratio formula and its application in real-world finance. Suitable for students in Grades 10-12.

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