Justin Company has total assets, liabilities, and shareholders' equity of $38,000, $17,000, and $21,000, respectively, at the beginning of 2017. At the end of 2017, total assets, liabilities, and shareholders' equity were reported at $32,000, $13,000, and $19,000, respectively. What is Justin's 2017 debt to equity ratio?
A)0.70
B)1.17
C)0.75
D)1.13

Question

Quizplus · Accepted Answer

Debt to Equity Ratio = Total Liabilities / Shareholders' Equity 
At the beginning of 2017: 
Debt to Equity Ratio = $17,000 / $21,000 = 0.81

At the end of 2017: 
Debt to Equity Ratio = $13,000 / $19,000 = 0.68

The average Debt to Equity Ratio for 2017 is: 
(0.81 + 0.68) / 2 = 0.75

Therefore, the answer is choice C, 0.75.

Justin Company Has Total Assets, Liabilities, and Shareholders' Equity of $38,000