Asked by Courtlyn Patrick on May 12, 2024
Verified
A company has total assets of $350,000 and total liabilities of $200,000.Its debt-to-equity ratio is 0.6.
Debt-To-Equity Ratio
It's a financial indicator that compares the proportions of debt and shareholders' equity in funding company assets.
Total Assets
The aggregate of current and fixed assets held by a corporation.
Total Liabilities
The total amount of financial obligations or debts that a company owes to external parties.
- Computing and analyzing the debt-to-equity ratio to evaluate a corporation's financial jeopardy.
Verified Answer
KS
Kiran SidhuMay 18, 2024
Final Answer :
False
Explanation :
The debt-to-equity ratio is calculated as total liabilities divided by total equity. Total equity is total assets minus total liabilities, which in this case is $350,000 - $200,000 = $150,000. The debt-to-equity ratio would therefore be $200,000 / $150,000 = 1.33, not 0.6.
Learning Objectives
- Computing and analyzing the debt-to-equity ratio to evaluate a corporation's financial jeopardy.
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