What is the debt ratio of White Memorial Hospital if its debt-to-equity ratio is 0.67?

The debt ratio measures the proportion of a hospital's total assets that are financed by debt. It is calculated using the formula:

Debt Ratio = Total Debt / (Total Debt + Total Equity)

Given that the debt-to-equity ratio is 0.67, this means that for every dollar of equity, the hospital has 67 cents in debt. To derive the debt ratio from the debt-to-equity ratio, we can set up the relationship as follows:

1. Assume total equity is represented by a variable, say E.

2. Then, the total debt would be 0.67E since the debt-to-equity ratio is 0.67.

3. Therefore, the total amount of assets (Total Debt + Total Equity) would be the sum of the debt and equity: 0.67E + E = 1.67E.

4. Now, applying the debt ratio formula:

Debt Ratio = Total Debt / Total Assets

= 0.67E / 1.67E

= 0.67 / 1.67

= 0.40 or 40 percent.

Thus, the debt ratio of White Memorial Hospital is 40 percent. This indicates that 40 percent of the