With all her recent acquisitions, Big Bertha needs to take a good look at her debt to equity ratio. If she owes $100,000 in long term debt, $50,000 in short term loans, and has $1,000,000 in shareholder equity, what is her debt to equity ratio?
A).15
B).10
C).05
D).50
E).20

Question

Quizplus · Accepted Answer

The debt to equity ratio is .15. This is calculated by taking total debt and dividing it by shareholder equity. In this case: 150,000 / 1,000,000.
Key Takeaway: The debt to equity ratio is a formula: Total Debt / Shareholder Equity. It is a measurement of a company's financial leverage.

With All Her Recent Acquisitions, Big Bertha Needs to Take