The balance sheet for Jim's Hardware has the following items listed. Current Liabilities, $25,345; Long -Term Debt, $100,000; Total Liabilities, $125,345; Total Assets, $325,490. What is the Debt to Equity Ratio for this company?
A) 0.385
B) 0.499
C) 0.307
D) 0.626
E) 0.198

Question

Quizplus · Accepted Answer

The Debt to Equity Ratio is calculated as Total Liabilities divided by Shareholders' Equity. Shareholders' Equity is Total Assets minus Total Liabilities, which is $325,490 - $125,345 = $200,145. The Debt to Equity Ratio is $125,345 / $200,145 = 0.626.

The Balance Sheet for Jim's Hardware Has the Following Items