Asked by Monica Landrum on Jul 06, 2024
Verified
Ajax Corporation has $10 million in debt and $75 in equity. The debt to equity ratio in lowest terms is 2:15.
Debt to Equity
A financial ratio indicating the relative proportions of shareholders' equity and debt used to finance a company's assets.
- Master the procedure of calculating and condensing ratios.
- Grasp the concept of maintaining the same ratio under changing conditions in sports, business, and finance.
Verified Answer
CB
Corinne BrownJul 11, 2024
Final Answer :
False
Explanation :
The debt to equity ratio is calculated as $10 million in debt divided by $75 million in equity, which simplifies to 2:15, not $75 in equity. If it's $75 in equity, the calculation would be incorrect; assuming the equity is actually $75 million, the ratio would be 2:15, but the question seems to imply $75, not $75 million, which would lead to a misunderstanding.
Learning Objectives
- Master the procedure of calculating and condensing ratios.
- Grasp the concept of maintaining the same ratio under changing conditions in sports, business, and finance.