Lauren Company is currently under scrutiny by government regulators. Lauren hasnt been charged with any crimes, but government investigators are suspicious about Laurens entire industry. The suspicion is that Lauren Company, and its industry competitors, have taken advantage of current market conditions to substantially increase their level of borrowingputting the banking system at risk.

Government regulators want to see what Lauren Companys DEBT RATIO is this year in order to assess whether Lauren has indeed increased borrowing to a dangerous level.

Consider the items below. Which items are used in computing DEBT RATIO?

Capital Stock Cost of Goods Sold Total Assets Total Liabilities Net Income Retained Earnings Sales

• Total Assets and Total Liabilities
• Retained Earnings and Total Assets
• Total Assets and Capital Stock
• Total Liabilities and Net Income
• Sales and Total Liabilities