The company's debt-to-equity ratio at the end of Year 2 is closest to:

A) 0.22
B) 0.27
C) 0.45
D) 0.19

Question

The company's debt-to-equity ratio at the end of Year 2 is closest to:A) 0.22B) 0.27C) 0.45D) 0.19

Blythe Baker · Accepted Answer

Final Answer : C, Explanation :  Debt-to-equity ratio = Total liabilities/Total equityAt the end of Year 2, the company's total liabilities = $400,000 + $75,000 = $475,000The company's total equity = $750,000Therefore, the debt-to-equity ratio = $475,000/$750,000 = 0.633The closest answer option is C)0.45. Debt-to-equity ratio = Total liabilities ÷ Stockholders' equity= $481,000 ÷ $1,072,000 = 0.45 (rounded)

The company's debt-to-equity ratio at the end of Year 2 is closest to:

A) 0.22
B) 0.27
C) 0.45
D) 0.19

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