Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:

A) 0.50
B) 0.36
C) 0.19
D) 0.17

Question

Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:A) 0.50B) 0.36C) 0.19D) 0.17

Angelica Kennell · Accepted Answer

Final Answer : B, Explanation :  Debt-to-equity ratio= Total Debt/Total EquityGiven, Debt at the end of Year 2 = $260,000Equity at the end of Year 2 = $722,500Hence, Debt-to-equity ratio = $260,000/$722,500 = 0.36 (approx.)Therefore, the closest answer is Option B. Debt-to-equity ratio = Total liabilities ÷ Stockholders' equity = $650 ÷ $1,810 = 0.36 (rounded)Reference: CH14-Ref15Lasch Corporation has provided the following financial data from its balance sheet and income statement:

Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:

A) 0.50
B) 0.36
C) 0.19
D) 0.17

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