Backstreet Books, a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus. Allison Robards, the store owner, plans to visit her banker in the hopes of obtaining additional financing. In preparation for her visit, the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.
A)250%
B)105%
C)75%
D)30%

Question

Backstreet Books, a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus. Allison Robards, the store owner, plans to visit her banker in the hopes of obtaining additional financing. In preparation for her visit, the banker asks her for the following information:  Calculate the debt to equity ratio for Backstreet Books.
A)250% 
B)105% 
C)75% 
D)30%

Quizplus · Accepted Answer

Debt-to-equity ratio = Total liabilities / Total equity
Total liabilities = $650,000
Total equity = $619,000
Debt-to-equity ratio = $650,000 / $619,000 = 1.05 or 105%

Backstreet Books, a Small Eclectic Bookstore in a Bustling College